The Issue The issues in this case are whether Florida Housing Finance Corporation ("Florida Housing" or "Respondent") made a decision to determine Oasis at Renaissance Preserve I, LP ("Oasis" or "Petitioner") ineligible for SAIL funding for Request for Applications 2016-109 SAIL Financing of Affordable Multifamily Housing Developments to be used in Conjunction with Tax-Exempt Bond Financing and Non-competitive Housing Credits ("RFA"), that was contrary to a governing statute, rule, or solicitation specification, and, if so, whether that action was clearly erroneous, arbitrary, capricious, or contrary to competition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation, enter a final order consistent with its initial decisions: (1) dismissing the formal written protests of Oasis at Renaissance Preserve I, LP, and (2) awarding funding to Osceola Palos Verdes, Ltd. DONE AND ENTERED this 15th day of March, 2017, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 2017. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. 215 South Monroe Street, Suite 500 Tallahassee, Florida 32302 (eServed) Betty Zachem, Esquire Marisa G. Button, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Kate Flemming, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
The Issue The issue in this bid protest matter is whether Respondent, Florida Housing Finance Corporation's, intended award of funding under Request for Applications 2020-203 was contrary to its governing statutes, rules, or the solicitation specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to provide and promote public welfare by administering the governmental function of financing affordable housing in the state of Florida. For purposes of this administrative proceeding, Florida Housing is considered an agency of the state of Florida. Arthur Mays is a properly registered business entity in Florida and engaged in the business of providing affordable housing. Arthur Mays 2 On February 15, 2021, Florida Housing referred two other protests to RFA 2020-203 to DOAH, including DOAH Case Nos. 21-0611 and 21-0612. Florida Housing moved to consolidate all cases pursuant to Florida Administrative Code Rule 28-106.108, which was granted. As part of the Order of Consolidation, MHP, who was Petitioner in Case No. 21-0612, was joined as a Respondent in Case No. 21-0610. MHP subsequently moved to dismiss its separate, independent action in Case No. 21-0612, and continue as a party in Case No. 21-0610. Thereafter, Petitioner in Case No. 21-0611 (Hibiscus Grove, LP) voluntarily moved to dismiss its case, and the motion was granted. submitted an application to RFA 2020-203 seeking funding to help finance its housing redevelopment project in Miami-Dade County known as Arthur Mays Senior Villas. Arthur Mays' application was deemed eligible for, but was not selected for an award of, housing credits under RFA 2020-203. Florida Housing has been designated as the housing credit agency for the state of Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code. As such, Florida Housing is authorized to establish procedures to distribute low-income housing tax credits and to exercise all powers necessary to administer the allocation of those credits. § 420.5099, Fla. Stat. Florida Housing's low-income housing tax credit program (commonly referred to as "housing credits" or "tax credits") was enacted to incentivize the private market to invest in affordable rental housing. The affordable housing industry relies heavily on public funding, subsidies, and tax credits to support projects that may not be financially sustainable in light of the sub- market rents they charge. Because tax credits allow developers to reduce the amount necessary to fund a housing project, they can (and must) offer the tax credit property at lower, more affordable rents. As background, Florida Housing uses a competitive solicitation process to award low-income housing credits. Florida Housing initiates the solicitation process by issuing a request for applications ("RFA"). §§ 420.507(48) and 420.5093, Fla. Stat.; and Fla. Admin. Code Chapters 67- 48 and 67-60. The RFA competitive solicitation process begins when Florida Housing requests its Board of Directors (the "Board") to approve Florida Housing's plan for allocating resources through various RFAs. If the Board approves the plan, Florida Housing begins work on each individual RFA. The RFA at issue in this matter is RFA 2020-203, entitled "Housing Credit Financing for Affordable Housing Developments Located in Miami- Dade County." The purpose of RFA 2020-203 is to distribute funding to create affordable housing developments in Miami-Dade County, Florida. Through RFA 2020-203, Florida Housing intends to provide an estimated $7,420,440.00 of housing tax financing. Florida Housing's goal under RFA 2020-203 is to fund developments that qualified for the demographic commitment of Family, Elderly, and Urban Center Designation, selecting one Applicant per category. Florida Housing issued RFA 2020-203 on August 26, 2020.3 The RFA set forth the information each Applicant was required to provide. This information included a number of submission requirements, as well as a general description of the type of project that would be considered for funding. Applications were due to Florida Housing by November 17, 2020. Arthur Mays and MHP both timely applied for funding. Florida Housing appointed a Review Committee from amongst its staff to evaluate and score the applications. Florida Housing received 50 applications for housing credits under RFA 2020-203. The Review Committee reviewed, deemed eligible or ineligible, scored, and ranked applications pursuant to the terms of RFA 2020-203, as well as Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations.4 The Review Committee found 46 applications eligible for funding. Thereafter, through the ranking and selection process outlined in RFA 2020- 203, the Review Committee recommended three applications to the Board for funding for the Family, Elderly, and Urban Center Designation categories. On January 22, 2021, the Board formally approved the Review Committee recommendations. As part of its determinations, the Board selected MHP's development known as Southpointe Vista for the Urban 3 Florida Housing subsequently modified RFA 2020-203 on September 11, October 12, and November 9, 2020. 4 No protests were made to the specifications or terms of RFA 2020-203. Center Designation funding. The Board awarded $2,882,000 in tax credits to MHP to help finance Southpointe Vista. Arthur Mays protests the Board's selection of MHP's development instead of its own. Arthur Mays, the second ranked Applicant for the Urban Center Designation, challenges Florida Housing's determination of the eligibility of, and award to, MHP. If Arthur Mays successfully demonstrates that Florida Housing erred in accepting, then scoring, MHP's application, or the evidence demonstrates that MHP's application was ineligible or nonresponsive, then Arthur Mays will be entitled to an award of housing credits instead of MHP.5 Lewis Swezy testified on behalf of Arthur Mays. Mr. Swezy is a developer in South Florida and has vast experience developing major real estate developments in Miami-Dade County. Mr. Swezy also represented that he has significant experience with housing credit procurements having submitted well over 100 applications in response to Florida Housing RFAs. Mr. Swezy stated that Florida Housing has awarded him tax credits on approximately 20 occasions. Mr. Swezy raised two objections to MHP's application. Mr. Swezy argued that these two alleged deficiencies render MHP's application ineligible for funding. Therefore, Florida Housing should have disqualified MHP from an award of housing credits under RFA 2020-203. One of MHP's Principal Entities is not Registered to Transact Business in Florida as of the Application Deadline: First, Arthur Mays claims that information MHP included on its Principals of the Applicant and Developer(s) Disclosures Form causes MHP's application to be ineligible for consideration for housing credits. Arthur Mays specifically complains that one of the Second Level Principals that MHP identifies on its Principal Disclosures for the Applicant form (the "Principal 5 No party alleged that Arthur Mays' application failed to satisfy all eligibility requirements or was otherwise ineligible for funding under RFA 2020-203. Disclosures Form") is a foreign entity not authorized to do business in Florida. Arthur Mays argues that Florida law prohibits a corporate entity who has not obtained a certificate of authority from the Florida Department of State to transact business in Florida from serving as a principal of an Applicant for housing credits. Consequently, Florida Housing acted contrary to Florida statutes by considering MHP's application for housing credits under RFA 2020-203. To set the stage, RFA 2020-203 requires an Applicant for housing credits to produce evidence that it is legally formed in the State of Florida. Specifically, RFA 2020-203 Section Four, A.3.a(2), directs that: The Applicant must be a legally formed entity [i.e., limited partnership, limited liability company, etc.] qualified to do business in the state of Florida as of the Application Deadline. Include, as Attachment 2 to Exhibit A, evidence from the Florida Department of State, Division of Corporations, that the Applicant satisfies the foregoing requirements. Such evidence may be in the form of a certificate of status or other reasonably reliable information or documentation issued, published or made available by the Florida Department of State, Division of Corporations. Thereafter, RFA 2020-203 Section Four, A.3.c, entitled "Principals Disclosure for the Applicant and for each Developer," provides: (1) Eligibility Requirements To meet the submission requirements, upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019) ("Principals Disclosure Form") as outlined in Section Three above. * * * To meet eligibility requirements, the Principals Disclosure Form must identify, pursuant to Subsections 67-48.002(94), 67-48.0075(8) and 67- 48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. For Housing Credits, the investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company must be identified on the Principal Disclosure Form. Rule 67-48.0075(8) further instructs that: Unless otherwise stated in a competitive solicitation, disclosure of the Principals of the Applicant must comply with the following: The Applicant must disclose all of the Principals of the Applicant (first principal disclosure level). * * * The Applicant must disclose all of the Principals of all the entities identified in paragraph (a) above (second principal disclosure level); The Applicant must disclose all of the Principals of all of the entities identified in paragraph (b) above (third principal disclosure level). Unless the entity is a trust, all of the Principals must be natural persons; With its application, MHP submitted a Principals Disclosure Form per RFA 2020-203 Section Four, A.3.c. In the Principal Disclosures for the Applicant portion, in accordance with rule 67-48.0075(8), MHP disclosed three levels of principals. In the First Principal Disclosure Level, MHP listed "MHP FL I Manager, LLC" as both a "Manager" and "Non-Investor Member" of MHP. On the Second Principal Disclosure Level, MHP identified the principals associated with MHP FL I Manager, LLC, to include Archipelago Housing, LLC ("Archipelago"), W. Patrick McDowell 2001 Trust, and Shear Holdings, LLC. On the Third Principal Disclosure Level, MHP named the "natural person" principals of Archipelago as Kenneth P. Lee and Michael C. Lee. Arthur Mays, through Mr. Swezy, argues that Florida law requires all principals, i.e., Archipelago, to be legally formed entities authorized to do business in the State of Florida. At the final hearing, Mr. Swezy represented that Archipelago is legally registered in the State of Delaware. However, as of the application deadline for RFP 2020-203, Archipelago did not have a certificate of authority from the Florida Department of State to operate as a foreign limited liability company in Florida. Consequently, Florida Housing should have disqualified and rejected MHP's application. As legal authority for its position, Arthur Mays asserts that the provisions of chapter 605, Florida Statutes, apply to this procurement. Section 605.0902(1) states: A foreign limited liability company may not transact business in this state until it obtains a certificate of authority from the [Department of State]. From a philosophical standpoint, Mr. Swezy urged that obtaining authority to transact business in Florida is more than a mere ministerial act. A foreign entity that secures the appropriate certification from the Department of State must disclose the identities of all of its directors and officers to the State of Florida. In addition, Mr. Swezy explained that Florida Housing maintains a "bad actors" list of those persons who are disqualified from an award of housing credits, such as: individuals in arrears to Florida Housing, individuals with certain felony convictions, and members of the Florida Housing Board, among others. Because Archipelago did not register with the Department of State, however, Florida Housing has no effective avenue to confirm whether Archipelago's management team (and hence MHP's Third Level Principals) is eligible for an award of housing credits. Consequently, Florida Housing cannot know for certain whether MHP's Principal Disclosures Form is accurate. Florida Housing is also ignorant regarding what persons are actually making business decisions for MHP and/or its principals. Mr. Swezy further asserted that, because MHP was not required to ensure that all its principals (i.e., Archipelago) obtained the necessary certification to transact business in Florida, MHP gained a competitive advantage over other Applicants who fully disclosed all their management team members. MHP garnered an unfair advantage because Florida Housing could more easily verify corporate information on other Applicants' principals who were registered with the State of Florida. MHP's Site Control Documentation Contains a Material Misrepresentation: Second, Mr. Swezy questioned whether MHP's site control documentation complies with RFA 2020-203 requirements. Specifically, Mr. Swezy asserted that MHP made a "material misrepresentation" in its application by artificially increasing the cost of the land it purchased for its development. This maneuver allegedly allowed MHP to request a higher amount of housing credits. Therefore, Mr. Swezy insisted that MHP's improper distortion of the price of its property should render its application ineligible for tax credit funding. See § 420.518(1)(a), Fla. Stat. For the legal authority behind his argument, Mr. Swezy pointed to RFA 2020-203 Section Four, A.7, which required an Applicant to establish control over its development site. Under RFA 2020-203 Section Four, A.7.a, an Applicant demonstrated site control by submitting documentation showing "that it is a party to an eligible contract or lease, or is the owner of the subject property." MHP, to demonstrate evidence of its site control, included in its application an Agreement, dated November 15, 2020, wherein MHP agreed to buy certain real property from McDowell Acquisitions, LLC ("McDowell"), for a purchase price of $7,000,000. As revealed in an "Underlying Contract" dated October 22, 2020, McDowell acquired the property from Cutler Ridge Investment Group, LLC ("Cutler Ridge"), also for the amount of $7,000,000. The property McDowell bought from Cutler Ridge consists of a two- acre parcel of land that was divided into two separate lots. However, the subsequent sale between MHP and McDowell, only involved one of the two lots.6 Consequently, Mr. Swezy decried the fact that MHP agreed to pay $7,000,000 for a piece of property that was worth half that amount one month earlier. Compounding this turn of events, MHP, in its application, reported the "Total Land Cost" of its one-acre development (Southpointe Vista) as $7,000,000. Mr. Swezy argued that the two "eligible contracts" evince that MHP misrepresented the value for the land on which it intends to construct Southpointe Vista ($7,000,000 versus $3,500,000). Furthermore, based on this manipulation of the purchase price, Mr. Swezy asserts that MHP will be unjustly enriched by an additional $300,000 in housing credits annually (or over three million dollars in the aggregate) in excess of what it should receive from Florida Housing had MHP reported the true value of the land on which it will locate its development. Mr. Swezy stated that Arthur Mays computed the alleged housing credit overpayment using what he referred to as the "gap calculation" formula. Mr. Swezy explained that MHP sought $2,882,000 in housing credits, which was the maximum amount available under RFA 2020-203. See RFP 2020-203 Section Four, A.10(1)(a). Mr. Swezy contended that the "gap calculation" formula indicates that if MHP recorded the "true" cost of its 6 Mr. Swezy remarked that the other one-acre lot was attached to another application for RFA 2020-203 from MHP MD Senior I, LLLP ("MHP Senior"), which shares some of the same principals with MHP. MHP Senior submitted an application for a project called Southpointe Senior. (The Southpointe Senior application was not selected for funding by Florida Housing.) MHP Senior also reported the total value of its one-acre piece of property as $7,000,000. property ($3,500,000), then MHP would have been awarded only $2,517,380 in housing credits for Southpointe Vista.7 Based on MHP's material misrepresentation, Mr. Swezy argues that Florida Housing should have deemed MHP's application ineligible for funding under RFA 2020-203. Instead, Florida Housing should have awarded housing credits to Arthur Mays as the next eligible Applicant. Otherwise, Florida Housing will be allowing MHP to receive an undeserved financial windfall. Florida Housing, in support of its intended award to MHP, presented the testimony of Marisa Button. Ms. Button is Florida Housing's Director of Multifamily Allocations. In her job, Ms. Button oversees Florida Housing's RFA process. At the final hearing, Ms. Button testified that Florida Housing appropriately deemed MHP's application for Southpointe Vista eligible for funding. Ms. Button agreed with Mr. Swezy that RFA 2020-203 required the Applicant (MHP) to demonstrate that it is a legally formed entity qualified to do business in the State of Florida. (Which MHP did.8) However, she advised that no language in chapter 420, chapter 67-48, or the RFA explicitly requires the Applicant to establish that its principals were also qualified to do business in Florida. Ms. Button specifically pointed to the language of RFA 2020-203 Section Four, A.3.a(2), which only directs the "Applicant" (and the "Developer entity") to be "a legally formed entity … qualified to do business in the state of Florida as of the Application Deadline." See also RFP 2020-203 Section Five, A.1. Conversely, Ms. Button testified that Florida Housing has never enacted or imposed a requirement that principals, other than the Applicant 7 As described in his testimony, the gap calculation determines the "gap need" between the total cost of the housing project and the housing credit financing actually needed to make the housing project feasible. 8 MHP filed to operate as a limited liability company with the Florida Department of State on October 9, 2020. itself, must register to transact business in Florida. The only related provision of RFA 2020-203 that applies to principals required that: [t]he Applicant, the Developer and all Principals are in good standing among all other state agencies and have not been prohibited from applying for funding.[9] Since the information in MHP's application reported that Archipelago was legally formed to operate in the State of Delaware, Ms. Button relayed that Florida Housing was satisfied that MHP met this condition at the time of the application deadline. Although, Ms. Button conceded that Florida Housing did not independently verify the veracity of MHP's Principal Disclosures Form. Instead, Florida Housing accepted MHP's application as valid on its face (as it did for all Applicants). As Mr. Swezy commented, Ms. Button articulated that the purpose behind the Principal Disclosures Form is to allow Florida Housing the means to survey all names associated with an application to ensure that no principal (or Applicant or Developer) is included on Florida Housing's "bad actors" list. Such entities, which would include companies or individuals who owe arrearages to Florida Housing or have taken part in certain criminal activities, are prohibited from participating in a competitive solicitation for housing credits. See Fla. Admin. Code R. 67-48.004(2). Consequently, an Applicant that does not fully disclose or misrepresents its principals may be rendered ineligible for an award through an RFA. Regarding MHP's application, Ms. Button was not aware of any principal identified on MHP's Principal Disclosures Form (particularly Archipelago) who was precluded from participating in RFA 2020-203. To further support her position, Ms. Button relayed that Florida Housing faced a similar situation in the case of Heritage Village Commons, Ltd v. Florida Housing Finance Corporation, FHFC Case No. 2012-013-UC (Fla. FHFC RO May 23, 2012; FO June 8, 2012). In Heritage Village, following an informal hearing under section 120.57(2), Florida Housing ultimately determined that neither the administrative rules (at that time) nor the relevant solicitation specifications required the Developer of an Applicant to be a legally formed entity in the State of Florida. Florida Housing reasoned that, because the governing law did not require the Developer to be a legally formed entity, Florida Housing could not penalize the applicant "for failure to comply with a nonexistent rule." Ms. Button advanced that Heritage Village offers an instructive analysis to apply to the present matter. Ms. Button further commented that Florida Housing believes that Heritage Village creates a precedent that it should follow regarding the legal status of a principal of an RFA Applicant. Regarding the applicability of chapter 605, Ms. Button asserted that chapter 605 does not control Florida Housing's competitive solicitation process. Instead, procurements involving housing credits are governed by the provisions of chapter 420, which do not contain any requirement that an Applicant's principals must be registered to transact business in the state of Florida. Ms. Button maintained that the specific language of section 605.0902(1) does not dictate who may receive housing credits under chapter 420 or chapters 67-48 and 67-60. Neither has Florida Housing incorporated section 605.0902 into the RFA competitive solicitation process. Similarly, Ms. Button stated that the terms of RFA 2020-203 only required MHP as the Applicant, as well as Southpointe Vista's Developer, to be legally formed entities qualified to do business in the state of Florida, not Archipelago, as one of MHP's Second Level Principals. Finally, Ms. Button testified that whether MHP's principals were officially registered to transact business in Florida was not considered during the scoring of RFA 2020-203. Therefore, the fact that Archipelago was 9 See RFA 2020-203, Applicant Certification and Acknowledgement Form ("Certification and Acknowledgement Form"), para. 13. registered in the State of Delaware, not Florida, did not have any impact on Florida Housing's selection of MHP's application for housing credits. Neither did it somehow give MHP's application a competitive advantage. Accordingly, because Florida Housing's governing statutes, administrative rules, and the RFA 2020-203 specifications did not independently require an Applicant's principals to be registered to transact business in the State of Florida, Ms. Button took the position that MHP's application is eligible for funding, despite Archipelago's legal status in Florida as of the application deadline. Therefore, since MHP disclosed the required information regarding its principals in its application, Ms. Button declared that Florida Housing's decision to award housing credits to MHP did not contravene applicable law. Regarding Arthur Mays' claim that MHP's application should be disqualified for misrepresenting the cost of the land MHP intends to use for its housing site, Ms. Button relayed that the property cost of a development's location has no relation to an Applicant's eligibility for housing credits. Therefore, the fact that MHP allegedly represented that its development property cost twice its actual value is not a "material" representation that would affect Florida Housing's award of tax credits. Ms. Button explained that Florida Housing only reviews the land cost during the credit underwriting phase, which occurs after the competitive solicitation process is completed.10 Consequently, the cost for MHP to obtain the Southpointe Vista property had no bearing on the Review Committee's evaluation of its application for tax credits under RFA 2020-203. Expanding on her testimony, Ms. Button initially expressed that the cost of purchasing land is not an "eligible cost" that Florida Housing considers in determining whether an Applicant qualifies for housing credits. In practice, an Applicant is required to submit with their application information regarding its "Total Land Cost" on a Development Cost Pro Forma form (the "Development Cost Form"). See RFA 2020-203 Section Four, A.10.c, and Fla. Admin. Code R. 67-48.0075(3). The Development Cost Form reports an Applicant's funding "sources/uses." In layman's terms, to provide Florida Housing a better understanding of the financial viability of its housing development, the Applicant completes the Development Cost Form to identify its funding "sources," as well as the anticipated expenses (i.e., "uses") of bringing its development to fruition. If an Applicant shows that its "sources" equal or exceed its "uses," then the Development Cost Form demonstrates to Florida Housing that an Applicant's development is financially feasible. MHP, on its Development Costs Form, wrote that its Total Land Cost was $7,000,000 (as attested by Mr. Swezy). MHP included this figure in calculating its Total Development Cost, which MHP anticipated would reach 10 See RFA 2020-203 Section Four, A.7.a, which states that Florida Housing: [W]ill not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirement of this RFA to demonstrate site control. … During credit underwriting, if it is determined that the site control documents do not meet the above requirements, [Florida Housing] may rescind the award. a combined amount of $41,747,241. On the other side of the ledger, MHP reported that its anticipated funding sources equaled $45,704,400. Based on these numbers, Ms. Button relayed that MHP showed that its development carries a funding surplus of $3,957,159. Therefore, MHP demonstrated that its housing development, Southpointe Vista, is financially feasible. (Conversely, if MHP's Development Cost Form revealed a funding shortfall, i.e., that the costs ("uses") to develop Southpointe Vista exceeded the funding "sources," then Florida Housing would have had serious concerns regarding the development's financial health, which would have led to Florida Housing finding MHP ineligible for funding.) Regarding Arthur Mays' allegation that MHP doubled the actual cost of its land from $3,500,000 to $7,000,000, Ms. Button was not alarmed that MHP may have overstated the value of the property on which it intends to locate Southpointe Vista. Because MHP reported a funding surplus, Ms. Button stated that even if the actual cost of the land was half of what MHP reported ($3,500,000), MHP still would have reported a funding surplus for its project. (In fact, the surplus would have been $3,500,000 larger.) Consequently, Ms. Button contended that the fact that MHP may have overvalued the cost of its property on its Development Cost Form did not affect MHP's eligibility for housing credits under the terms of RFA 2020-203. Further, Ms. Button rejected Arthur Mays' charge that by increasing its land cost, MHP was able to improperly request a larger tax credit. Ms. Button relayed that after Florida Housing selects an application for award of housing credits, the Applicant is invited to enter the credit underwriting process. During this stage, Florida Housing underwriters will evaluate the application to ensure that it complies with all RFA eligibility requirements.11 As part of this review, a property appraisal report will typically be ordered to calculate the impact of the land cost on the Applicant's development. The credit underwriters also specifically assess the "gap calculation result" in recommending the actual housing credit allocation. See Fla. Admin. Code R. 67-48.0072(28)(e), (f), and (g) and 67-48.0075(3). Ms. Button reemphasized that the property cost for MHP's development is only considered during the credit underwriting phase, not during the scoring of its application. Ms. Button expressed that based on the results of the credit underwriting review, the total tax credits that MHP requested for Southpointe Vista are not necessarily the amount that it will receive. Ms. Button relayed that if credit underwriting determines that an award of housing credits to MHP would be inappropriate based on the circumstances, or that MHP materially misrepresented information in its application, then Florida Housing would likely reduce, if not completely reject, the award of housing credits for MHP's development. Finally, Ms. Button reiterated that the development property cost that MHP associated with Southpointe Vista had no bearing on the Review 11 Florida Housing's credit underwriting procedures are described in rule 67-48.0072, which provides: Credit underwriting is a de novo review of all information supplied, received or discovered during or after any competitive solicitation scoring and funding preference process, prior to the closing on funding … The success of an Applicant in being selected for funding is not an indication that the Applicant will receive a positive recommendation from the Credit Underwriter or that the Development team's experience, past performance or financial capacity is satisfactory. The credit underwriting review shall include a comprehensive analysis of the Applicant, the real estate, the economics of the Development, the ability of the Applicant and the Development team to proceed, the evidence of need for affordable housing in order to determine that the Development meets the program requirements and determine a recommended … Housing Credit allocation amount … , if any. (emphasis added) Committee's evaluation of its application. The Review Committee did not consider land acquisition cost when it scored MHP's application. Therefore, Ms. Button maintained that the fact that MHP listed its Total Land Cost as $7,000,000 did not give MHP a competitive advantage. Neither did the fact that MHP may have overstated its Total Land Cost by $3,500,000 increase its chance of winning the housing credits. Consequently, the numbers MHP listed on its Development Costs Form did not adversely prejudice other Applicants. Neither did they provide MHP a scoring benefit during the competitive solicitation process. Ms. Button asserted that MHP's Total Land Cost did not have any impact on Florida Housing's decision to select MHP's development for award of tax credits under RFA 2020-203. Ms. Button also testified that RFA 2020-203 did not require applicants to provide a property appraisal to substantiate the land cost recorded on the Development Cost Form. She further added that no evidence shows that MHP's agreement to purchase the property from McDowell was an invalid contract, or that $7,000,000 was not a reasonable price for the one-acre lot for Southpointe Vista. Consequently, Ms. Button contended that the fact that MHP may have inflated the cost of its development site to twice its actual value is not a "material" representation that affected Florida Housing's award of tax credits to MHP. Ms. Button's explanation detailing why MHP's application was eligible for consideration for housing credits under RFA 2020-203 is credible and is credited. Ms. Button persuasively testified that the information MHP included in its application legally complied with RFA requirements and allowed Florida Housing to effectively evaluate its request for funding for its housing development. Ms. Button further capably refuted Arthur Mays' allegation that MHP somehow received a competitive advantage during the solicitation process. Accordingly, based on the evidence in the record, Arthur Mays did not demonstrate, by a preponderance of the evidence, that Florida Housing's award of housing credits to MHP was clearly erroneous, contrary to competition, arbitrary, or capricious. Therefore, Arthur Mays did not meet its burden of proving that Florida Housing's intended award of housing credit funding to MHP under RFA 2020-203 was contrary to its governing statutes, rules or policies, or the solicitation specifications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order dismissing the protest of Arthur Mays. It is further recommended that the Florida Housing Finance Corporation select MHP's application as the recipient of housing credit funding for the Urban Center Designation under RFA 2020-203. DONE AND ENTERED this 26th day of May, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Lawrence E. Sellers, Jr., Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 S J. BRUCE CULPEPPER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of May, 2021. Tiffany A. Roddenberry, Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Jeffrey Stephen Woodburn, Esquire Woodburn & Maine 204 South Monroe Street Suite 201 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire 215 South Monroe Street Suite, 750 Tallahassee, Florida 32301 Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Jason L. Maine, General Counsel Woodburn & Maine, Attorneys at Law 204 South Monroe St Suite 201 Tallahassee, Florida 32301 Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue The issue for determination in this bid protest proceeding is whether the Florida Housing Finance Corporation’s (“Florida Housing”) intended award of tax credits for the preservation of existing affordable housing developments was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the oral and documentary evidence presented at hearing, and the entire record in this proceeding, the Findings of Fact are as follows: Parties Petitioner, Madison Point, is a Florida limited liability company and the designated applicant for funding through the RFA to construct an 85-unit development for low- income elderly persons in Pinellas County, Florida. Petitioner, American Residential Development, LLC, is the designated developer for the proposed development. Intervenor, Heritage Oaks, is a Florida limited liability limited partnership in the business of providing affordable housing. Heritage Oaks is an applicant for financing in response to the RFA to construct an 85-unit development for low-income elderly persons in Pinellas County, Florida. Intervenor, HTG Hudson, is a Florida limited liability company in the business of developing affordable housing. HTG Hudson was an applicant for financing in response to the RFA to construct an 87-unit development for low-income elderly persons in Pinellas County, Florida. However, all issues regarding HTG Hudson have been resolved pursuant to a settlement agreement which was attached as Exhibit “A” to the Joint Prehearing Stipulation. Pursuant to the settlement agreement, HTG Hudson’s application is ineligible for funding. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes, and for the purpose of this proceeding, an agency of the State of Florida. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. Affordable Housing Tax Credits The low-income housing tax credit program (commonly referred to as “tax credits” or “housing credits”) was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that it reduces the amount that the developer would have to borrow otherwise. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the tax credits. The demand for tax credits provided by the federal government exceeds the supply. Florida Housing is authorized to allocate tax credits, State Apartment Incentive Loan (“SAIL”) funding, and other funding by means of request for proposal or other competitive solicitation in section 420.507(48), and adopted Florida Administrative Code Chapter 67-60, to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its tax credits, which were made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). Application Process In their applications, applicants request a specific dollar amount of housing credits to be given to the applicant each year for a period of 10 years. Applicants will normally sell the rights to that future stream of income tax credits (through the sale of almost all of the ownership interest in the applicant’s entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends upon the accomplishment of several factors such as a certain percentage of the projected “total development cost” (total costs incurred in the completion of a development); a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. This, however, is not an exhaustive list of the factors considered. Tax credits are made available through a competitive application process commenced by the issuance of an RFA. An RFA is equivalent to a “request for proposal” as indicated in rule 67-60.009(3). The RFA at issue here is RFA 2016-113, Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas counties. The RFA was issued on October 28, 2016, and responses were initially due December 8, 2016. The RFA was modified on November 10, 2016, and, among other revisions, the application deadline was extended to December 30, 2016. Through the RFA, Florida Housing seeks to award up to an estimated $14,669,052 of housing credits to qualified applicants in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas counties. In response to RFA 2016-113, 43 applications were submitted for funding, including Madison Point and Heritage Oaks. Madison Point submitted application No. 2017-232C seeking $1,660,000 in annual allocation of housing credits to finance the construction of an 80-unit development in Pinellas County. Heritage Oaks submitted application No. 2017-201C, seeking $1,660,000 in annual allocation of housing credits to finance the construction of an 85-unit development in Pinellas County. The RFA sets forth the information required to be provided by an applicant, which includes a general description of the type of projects that will be considered eligible for funding and delineates the submission requirements. In order to be considered for funding selection, the application must meet all of the eligibility requirements set forth in the RFA. The eligibility requirements include, among other things, “[a]ll “Mandatory Items” described in section five of the RFA.” The RFA sets forth a list of mandatory items that must be included in a response including, but are not limited to, appropriate zoning, site control, development category, and occupancy status of any existing units. As part of the general development information, the RFA requires applicants to select a development category applicable to its proposed development. This is a mandatory item of the RFA. Applicants are instructed to select amongst the following categories: New Construction (where 50 percent or more of the units are new construction) Rehabilitation (where less than 50 percent of the units are new construction) Acquisition and Rehabilitation (acquisition and less than 50 percent of the units are new construction) Redevelopment (where 50 percent or more of the units are new construction) Acquisition and Redevelopment (acquisition and 50 percent or more of the units are new construction) Once disclosed in the application, the development category cannot be changed. In the RFA, “new construction” while capitalized is not a defined term. However, rule 67-48.002(98), defines “redevelopment” as follows: With regard to a proposed Development that involves demolition of multifamily rental residential structures currently or previously existing that were originally built in 1986 or earlier and either originally received financing or are currently financed through one or more of the following HUD or RD programs: Sections 202 of the Housing Act of 1959 (12 U.S.C. §1701q), 236 of the National Housing Act (12 U.S.C. §1701), 514, 515, or 516 of the U.S. Housing Act of 1949 (42 U.S.C. §1484), 811 of the U.S. Housing Act of 1937 (42 U.S.C. §1437), or have PBRA; and new construction of replacement structures on the same site maintaining at least the same number of PBRA units; or With regard to proposed Developments that involve demolition of public housing structures currently or previously existing on a site with a Declaration of Trust that were originally built in 1986 or earlier and that are assisted through ACC; and new construction of replacement structures on the same site, providing at least 25 percent of the total new units with PBRA, ACC, or both, after Redevelopment. Although the Rehabilitation Category is defined, it is not relevant for purposes of this proceeding. Additionally, the RFA requires applicants to answer whether the proposed development consists of: a) 100 percent new construction units; b) 100 percent rehabilitation units; or c) a combination of new construction units and rehabilitation units, and state the quantity of each type. This is a mandatory item of the RFA. Selection Process Florida Housing received 43 applications seeking funding in RFA 2016-113. Florida Housing’s executive director appointed a Review Committee of Florida Housing staff to evaluate the applications for eligibility and scoring and to make recommendations to Florida Housing’s Board of Directors. Pursuant to the terms of the RFA, the applications were received, processed, deemed eligible or ineligible, scored, and ranked. The Review Committee determined that, among other applicants, the applications of Heritage Oaks and Madison Point were eligible for funding. Through the ranking and selection process outlined in the RFA, Heritage Oaks was recommended to the Board of Directors to be selected for funding within Pinellas County. The Review Committee developed a chart listing its funding recommendations for the RFA to be presented to Florida Housing’s Board of Directors. On May 5, 2017, Florida Housing’s Board of Directors met and considered the recommendations of the Review Committee for RFA 2016-113. Also, on May 5, 2017 following the Board meeting, Petitioners, and all other applicants in RFA 2016-113, received notice that Florida Housing’s Board of Directors determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of tax credits. Such notice was provided by the posting of two spreadsheets, one listing the “eligible” and “ineligible” applications in RFA 2016-113 and one identifying the applications which Florida Housing proposed to fund on the Florida Housing website, www.floridahousing.org. Of the 43 applications submitted, 37 were deemed “eligible” and six were deemed “ineligible.” In that May 5, 2017, posting, Florida Housing announced its intention to award funding to seven applications, including Heritage Oaks. Madison Point was deemed eligible but not selected for funding. Madison Point timely filed a Notice of Protest and Petition for Formal Administrative Proceedings. Heritage Oaks intervened as a named party and intervention was granted. The scoring decisions at issue in this proceeding are related to Florida Housing’s decision to award funding to Heritage Oaks based on its responses regarding occupancy status and local government contribution. The RFA specifies an “application sorting order” to rank applicants for potential funding. The first consideration in sorting eligible applications for potential funding is application score. The maximum score an applicant can achieve is 28 points. In the case of a tie score, Florida Housing incorporated a series of “tie breakers” into the sorting process. The tiebreakers for this RFA, in order of applicability, are: First, by Development Category Funding Preference; Second, by a Per Unit Construction Funding Preference; Third, by a Leveraging Classification based on the amount of total Florida Housing funding per set-aside unit; Fourth, by the eligibility for the 75 or More Total Unit Funding Preference; Fifth, by satisfaction of a Florida Job Creation Funding preference, which applies a formula to reflect the estimated number of jobs created per $1 million of funding; Lastly, if necessary, by randomly assigned lottery number. The RFA set out a selection process for eligible applicants, after the sorting and ranking process outlined above. That selection process consisted of selecting the highest ranking eligible application for a proposed development in each of the following counties first: Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas. If funding remained after those selections, then the highest ranking eligible unfunded application in Broward would be selected next. Heritage Oaks and Madison Point selected the elderly non-Assisted Living Facility (“ALF”) demographic and the proposed developments were located in Pinellas County. Florida Housing’s preliminary agency action selected Heritage Oaks for funding for Pinellas County. Heritage Oaks’ Application Heritage Oaks’ proposed development site consists of approximately 4.99 acres. Heritage Oaks’ proposed development site contains existing roads owned by Pinellas County. Heritage Oaks indicates that its proposed development site was comprised of scattered sites. There are existing housing units on Heritage Oaks’ development site. However, Heritage Oaks’ application indicates that “there are no existing units.” Heritage Oaks’ application selected “new construction” as its development category. Heritage Oaks’ proposed development involves demolition of currently-occupied, multifamily, public housing rental structures that were originally built in 1986 or earlier and either originally received financing or are currently financed through one or more of the following HUD or RD programs: Sections 202 of the Housing Act of 1959 (12 U.S.C. § 1701 q); 236 of the National Housing Act (12 U.S.C. § 1701); 514, 515, or 516 of the U.S. Housing Act of 1949 (42 U.S.C. § 1484); and 811 of the U.S. Housing Act of 1937 (42 U.S.C. § 1437). Development Category In response to the RFA requirements, Heritage Oaks selected “New Construction” as its development category. Heritage Oaks also indicated that its proposed development consists of 100 percent new construction. Mr. Evjen acknowledged that Heritage Oaks’ proposed development involves the demolition of existing structures on the proposed development site and the construction of 85 new units. Mr. Evjen explained that the proposed development includes 71 senior units in a three-story, mid-rise building, and seven duplex buildings, which would include the other 14 units on the proposed development site. The testimony at hearing indicated that at the time of the application deadline, Heritage Oaks’ proposed development did not satisfy all of the criteria set forth in the definition of redevelopment, as set forth in paragraph 18, supra. At hearing, Mr. Evjen and Ms. Blinderman testified that to qualify as redevelopment, at least 25 percent of the new units must receive Project Based Rental Assistance (“PBRA”). PBRA units are those with a rental subsidy through a contract with the United States Department of Housing and Urban Development (“HUD”) or the Rural Development Services (formerly the Farmer’s Home Administration) of the United States Department of Agriculture. See Fla. Admin. Code Rules 67-48.002(72), (85), and (98). Heritage Oaks intends to develop the proposed development with Pinellas County Housing Authority (“Housing Authority”). At the time of the application deadline, the Housing Authority was in discussions with HUD regarding the final count, if any, of PBRA units. The lack of a resolution with HUD is beyond the authority of Heritage Oaks and remains uncertain. As of the application deadline, Heritage Oaks could not know if 25 percent of its new units would receive PBRA and, therefore, could not classify the proposed development as redevelopment. While it may be possible that Heritage Oaks’ proposed development may meet the definition of redevelopment at some point in the future, at the time of the application it did not meet the definition. At hearing, no testimony or documentary evidence was offered to establish that the proposed development currently falls within the definition of redevelopment. Respondent found this classification to be acceptable. Petitioners assert that it is reasonable that Heritage Oaks would meet the threshold to satisfy the criteria for the redevelopment category. However, it was more reasonable that Heritage Oaks would not meet the threshold and be ineligible for funding, if the redevelopment category had been incorrectly selected. Therefore, the evidence supports that it was reasonable for Heritage Oaks to identify its development project as new construction. Occupancy Status Petitioners also argue that Heritage Oaks should not be awarded funding because it failed to disclose the occupancy status of existing units on the proposed development site. In the RFA, the subheading and language for section four (A)(5)(e)(3) provides as follows: Number of Units in Proposed Development: The Applicant must indicate which of the following applies with regard to the occupancy status of any existing units: Existing units are currently occupied Existing units are not currently occupied There are no existing units The section then instructs the applicant to refer to section four (A)(5)(e) of the RFA instructions before answering the occupancy status question. The RFA instructions at section four (A)(5)(e) provide as follows: e. Number of Units in Proposed Development: The Applicant must state the total number of units. Note: The proposed Development must consist of a minimum of 50 total units. Proposed Developments consisting of 75 or more total units will be eligible for the 75 or More Total Unit Funding Preference (outlined at Section Four B.2. of the RFA). If the Elderly Demographic Commitment (ALF or Non- ALF) is selected at question 2.b. of Exhibit A, the proposed Development cannot exceed the maximum total number of units outlined in Item 1 of Exhibit C of the RFA. The Applicant must indicate whether the proposed Development consists of (a) 100% new construction units, (b) 100% rehabilitation units, or (c) a combination of new construction units and rehabilitation units, and state the quantity of each type. The Applicant must indicate the occupancy status of any existing units at question 5.e.(3) of Exhibit A. Developments that are tentatively funded will be required to provide to the Credit Underwriter a plan for relocation of existing tenants, as outlined in Item 2.b.(6) of the Applicant Certification and Acknowledgement form. The plan shall provide information regarding the relocation site; accommodations relevant to the needs of the residents and length of time residents will be displaced; moving and storage of the contents of a resident’s dwelling unit; as well as the approach to inform and prepare the residents for the rehabilitation activities. In response to this RFA requirement and the cited RFA Instructions concerning Occupancy Status, Heritage Oaks indicated that “there are no existing units” in its proposed development. However, Mr. Evjen testified that there were existing units on the development site as of the application deadline and some of those units were occupied. Heritage Oaks pointed out that a review of the RFA reflects that it is organized in an outline format with headings and subheadings. For example, section four concerns information to be provided in the application. Section four A(5) then requests general development information. Section four (A)(5)(e) requests information concerning the number of units in the proposed development. Mr. Evjen further testified that, based on review of the RFA and the instructions, Heritage Oaks took a three-step approach in responding to the occupancy status question. Heritage Oaks properly answered the first two questions. First, Heritage Oaks provided the total number of units as 85. Second, Heritage Oaks indicated that “all 85 units would be new construction.” In the final question, Heritage Oaks considered whether any existing units would remain as a “part of its proposed development.” Because no existing units would be part of its proposed development, Heritage Oaks responded “there are no existing units” in its proposed development. However, the term “proposed” was not used in question 5.e.(3) as was the case in the prior questions in the same subsection. Mr. Evjen also testified that he read the question as “if there are rehab[ilitation] units, are they occupied? Heritage Oaks’ erroneous interpretation of the question resulted in its failure to provide an accurate answer. The question simply requested the “occupancy status of any existing units.” The question was clear and unambiguous. The parties have stipulated that there are existing housing units on the Heritage Oaks proposed development site. However, Heritage Oaks’ application indicates that there are no existing units. The representation that there were no existing units was a false statement of material fact. It is worth noting that the parties stipulated at the beginning of the hearing that there is no allegation of fraud or intentional deception. There is also no evidence in the record of intentional deception and therefore, there is no finding by the undersigned that Heritage Oaks engaged in intentional misconduct. However, whether intentional or not, Heritage Oaks’ representation of no existing units is a false statement. According to Mr. Reecy, Florida Housing asks the question regarding occupancy status of existing units because Florida Housing wants to make sure that the developer can handle the cost issues related to relocation and that the relocation needs of the existing tenants will be met. Additionally, Mr. Reecy testified that Florida Housing relies upon applicants to accurately respond to questions in the RFA because, at the time of scoring, no independent research is conducted to verify responses. Regarding a relocation plan, Heritage Oaks relies on the Declaration of Trust’s requirement to have a tenant relocation plan as a remedy for the failure to properly respond to the occupancy status question. However, the Declaration of Trust is a HUD requirement that is not controlled by Florida Housing. In fact, Mr. Evjen testified that Heritage Oaks’ co-developer was researching terminating the Declaration of Trust. Given the fact that Heritage Oaks could terminate its Declaration of Trust, the Declaration of Trust does not provide adequate assurance that the tenants in the existing housing units will be adequately relocated once Florida Housing allocates its funding. Florida Housing has a material interest in ensuring that tenants located in existing housing units are properly and adequately relocated during the development phase of any Florida Housing-funded development. Accordingly, Florida Housing’s scoring decision with regard to Heritage Oaks’ response to the occupancy status question was contrary to the terms of the RFA and clearly erroneous. Heritage Oaks is ineligible for funding under RFA 2016-113. Local Government Contribution At section four (A)(10)(b), an applicant can obtain 10 points if it can demonstrate a high level of local government interest in its project via an increased amount of local government contribution. To satisfy this requirement, an applicant must attach a properly completed and executable Florida Housing Finance Corporation Local Government Verification of Contribution-Loan Form (“loan form”). The RFA establishes a contribution threshold amount which qualifies an application for the local government area of opportunity points. The RFA defines “local government areas of opportunity” as follows: Developments receiving a high level of Local Government interest in the project as demonstrated by an irrevocable funding contribution that equals or exceeds 2.5 times the Total Development Cost Per Unit Base Limitation (exclusive of any add-ons or multipliers), as provided in Item 7 of Exhibit C to the RFA, for the Development Type committed to for the proposed Development. The minimum local government areas of opportunity funding amounts are outlined in section four A.10.b. of the RFA. A single jurisdiction (i.e., the county or a municipality) may not contribute cash loans and/or cash grants for any other proposed development applying in the same competitive solicitation in an amount sufficient to qualify as Local Government Areas of Opportunity, per the competitive solicitation. In response to this RFA requirement, Heritage Oaks submitted Attachment 15, a loan form from Pinellas County, Florida, in the amount of $551,000. Based upon the minimum local government area of opportunity funding amounts established in the RFA, this amount qualified Intervenor Heritage Oaks for 10 points. Petitioners challenge Intervenor Heritage Oaks’ loan form for two reasons. First, Petitioners opine that the face value of the commitment and the net present value included in the loan form cannot be the same amount and, therefore, a calculation error must have occurred. Petitioners rely on examples of various calculations found in the RFA. Next, Petitioners allege that the loan form was not properly signed and no final approval was given by Pinellas County. Intervenor Heritage Oaks provided a loan form from Pinellas County. The loan form committed Pinellas County to a loan in the amount of $551,000. Mr. Bussey, the individual who processed the application and award of commitment, indicated that the commitment was a loan that would be forgiven as long as certain requirements were met and kept. Mr. Bussey further indicated that there were no loan payments or interest rates associated with the loan. Accordingly, he indicated that the loan value was the net present value of the loan, which means the commitment amount and the net present value for the Pinellas County loan is the same number, $551,000. While Petitioners allege that the loan form was not appropriately signed and no final approval had occurred, the greater weight of the evidence shows otherwise. Specifically, Petitioners opine that either a resolution or some action by the Pinellas County Board of County Commissioners or the County Administrator was necessary as asserted by their witness, Mr. Banach. While Mr. Banach was critical of the loan verification form, he acknowledged that he is not an expert regarding the process for Pinellas County loan contribution and he did not process the loan application. He further acknowledged that Mr. Bussey, the individual who processed the loan, found no error with the form. The evidence shows that the loan form was executed by Charles Justice, who at the time of the loan form’s execution was the Chairman of the Pinellas County Board of County Commissioners. Mr. Bussey explained the process for approving the loan form and indicated that Mr. Justice, as Chairman, had the authority to sign the loan form. Mr. Bussey also pointed out language in the loan form which provides as follows: “This certification must be signed by the chief appointed official (staff) responsible for such approval, . . . Chairperson of the Board of the County Commissioners.” Mr. Justice is one of the designated individuals the form itself indicated is acceptable. Mr. Bussey indicated that no further approvals were necessary. At hearing, Florida Housing indicated that the loan form submitted by Heritage Oaks satisfied the requirements of the RFA and this position was not shown to be erroneous or unreasonable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order rescinding the intended award to Heritage Oaks and designating Madison Point and America Residential Development, LLC, as the recipients of the funding under RFA 2016-113. DONE AND ENTERED this 11th day of August, 2017, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 2017. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Marisa G. Button, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Michael G. Maida, Esquire Michael G. Maida, P.A. 1709 Hermitage Boulevard, Suite 201 Tallahassee, Florida 32308 (eServed) Douglas P. Manson, Esquire Manson Bolves Donaldson & Varn, P.A. 1101 West Swann Avenue Tampa, Florida 33606-2637 (eServed) Paria Shirzadi, Esquire Manson Bolves Donaldson & Varn, P.A. 1101 West Swann Avenue Tampa, Florida 33606-2637 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson Varn, P.A. 204 South Monroe Street, Suite 201 Tallahassee, Florida 32301 (eServed) J. Timothy Schulte, Esquire Zimmerman, Kiser, & Sutcliffe, P.A. 315 East Robinson Street, Suite 600 Orlando, Florida 32801 (eServed) Sarah Pape, Esquire Zimmerman, Kiser, & Sutcliffe, P.A. 315 East Robinson Street, Suite 600 Orlando, Florida 32801 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC 1725 Capital Circle Northeast, Suite 304 Tallahassee, Florida 32308 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. Post Office Drawer 190 215 South Monroe Street, Suite 500 Tallahassee, Florida 32302-0190 (eServed) Kate Flemming, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
The Issue Whether Respondent, Florida Housing Finance Corporation’s (“Florida Housing”), decision to award funding, pursuant to Request for Applications 2017-111 (“the RFA”), to HTG Sunset, LLC (“Sunset Lake”); HTG Creekside, LLC (“Oaks at Creekside”); and Harper’s Pointe, LP (“Harper’s Pointe”), is contrary to its governing statutes, rules, or the RFA specifications; and, if so, whether the decision is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Petitioner Madison Oaks is the Applicant entity for a proposed affordable housing development to be located in Osceola County, Florida. Petitioner Sterling Terrace is the Applicant entity for a proposed affordable housing development to be located in Hernando County, Florida. American Residential and Sterling Terrace are Developer entities as defined by Florida Housing in Florida Administrative Code Rule 67-48.002(28). Sunset Lake, Oaks at Creekside, and Harper’s Pointe are all properly registered business entities in Florida in the business of providing affordable housing. Florida Housing is a public corporation organized pursuant to chapter 420, Part V, Florida Statutes, and, for the purposes of these proceedings, an agency of the State of Florida. Through the RFA, Florida Housing proposes to award an estimated $10,978,942 in Housing Credit Financing for Affordable Housing Developments located in medium and small counties (“affordable housing tax credits”). The RFA outlines a process for selecting developments for funding. Section Five B. outlines the Selection Process, and subsection 2. is the Application Sorting Order. On November 5, 2017, Florida Housing received 167 applications in response to the RFA. Madison Oaks, Sterling Terrace, Sunset Lake, Oaks at Creekside, and Harper’s Pointe timely submitted applications seeking funding to assist in the development of multi-family housing in medium counties. Florida Housing selected a review committee to score all submitted applications. The review committee issued a recommendation of preliminary rankings and allocations, and the Board of Directors of Florida Housing approved these recommendations on May 4, 2018. The Board found that the parties to this proceeding all satisfied the mandatory and eligibility requirements for funding, but awarded funding to Intervenors based upon the ranking criteria in the RFA. If Sterling Terrace can demonstrate that any two of the three Intervenors should not have been recommended for funding, it and Blue Sunbelt, LLC, will displace them as applications selected for funding. If Madison Oaks can demonstrate that all three Intervenors should not have been recommended for funding, Sterling Terrace and Blue Sunbelt, LLC, will displace them as applications selected for funding. Sunset Lake Section Four A.5.e.(3) of the RFA allows applicants to receive up to four points for proximity to certain community services. The RFA provides that applicants in medium counties must receive at least seven points to be eligible for funding, and at least nine points to be eligible for a Proximity Funding Preference. One of those community services is public schools, which are defined as follows: A public elementary, middle, junior and/or high school, where the principal admission criterion is the geographic proximity to the school. This may include a charter school, if the charter school is open to appropriately aged children in the radius area who apply, without additional requirements for admissions such as passing an entrance exam or audition, payment of fees or tuition, or demographic diversity considerations. Additionally, it must have been in existence and available for use by the general public as of the Application Deadline. (emphasis added). Sunset Lake identified the Jewett School of the Arts (“Jewett School”) as a public school, received four points for proximity, and as a result, was eligible for the Proximity Funding Preference. The Jewett School is a magnet school within the Polk County Florida School District. The Jewett School was in existence and available for use by the general public as of the application deadline. Petitioners maintain the Jewett School does not meet the definition of “public school.”4/ If the Jewett School does not meet the definition of a “public school,” Sunset Lake would not be entitled to four points for proximity to community services. As a result, it would have a total of seven points for proximity, and while it would remain eligible, it would lose the Proximity Funding Preference. As a result, Sunset Lake would not have been ranked as highly and would not have been recommended for funding. The Jewett School does not meet the RFA definition of “public school” because geographic proximity to the school is not the principal admission criterion. Although a student must live in Polk County Schools’ Magnet Zone B to apply for admission to the Jewett School, the principal admission criteria is a random lottery process. Geographic location within the Polk County magnet school zones is a threshold issue which qualifies a student to apply for admission. However, the magnet school decision-making process entails a subsequent elaborate demographic diversity analysis, sorting based on the outcome of that analysis, and, ultimately, a random lottery drawing which determines final admission. The Jewett School admission process is contrary to Florida Housing’s primary purpose of awarding proximity points to proposed housing developments--to ensure the intended residents can, in fact, use the services in proximity to the development. Sunset Lake is not entitled to four points for proximity to community services and should not be awarded Proximity Funding Preference. As a result, Sunset Lake should not have been ranked as highly and should not have been recommended for funding. Oaks at Creekside Oaks at Creekside identified the Manatee Charter School (“Manatee School”) as a public school, received three points for proximity, and, as a result, was eligible for funding but not for the Proximity Funding Preference. The Manatee School is a charter school located in Bradenton, Florida. The Manatee School was in existence and available for use by the general public as of the application deadline. Petitioners maintain the Manatee School does not meet the definition of a “public school.”5/ If the Manatee Charter School does not meet that definition, then Oaks at Creekside is not entitled to three points for proximity. As a result, it would have only six total proximity points, and would not be eligible for funding. Florida Housing maintains that a charter school must meet both parts of the definition of a public school in order for a proposed development to receive proximity points based on proximity to that school. That means a charter school must (1) use geographic proximity as the primary admission criteria, and (2) be “open to appropriately aged children in the radius area who apply, without additional requirements for admissions such as passing an entrance exam or audition, payment of fees or tuition, or demographic diversity considerations.” Geographic proximity is not the primary admission criterion for the Manatee School. On the contrary, the Manatee School is open for admission regardless of geographic proximity thereto. The Manatee School operates pursuant to a contract with the Manatee County School Board, and is “open to any student residing in the Manatee County School District, students covered in an interdistrict agreement and students as provided for in Section 1002.33(10), Florida Statutes (2010).”6/ The Manatee School operates a “controlled open enrollment” process. The application period opens in early January and closes at the end of February, and the School accepts students from any school district in the state whose parent or guardian can provide transportation to the school, if the school has not reached capacity. This process is sometimes referred to as “school choice” and is mandatory pursuant to section 1002.31, Florida Statutes.7/ The Manatee School has enrolled students throughout Manatee County, as well as from adjoining Sarasota County. Historically, the Manatee School has not reached capacity. Once the School reaches capacity in any one grade level or class, students will be selected by a system-generated, random lottery process. The term “radius area” is not defined in the RFA or in Florida Housing’s rules. Florida Housing introduced no evidence regarding the meaning of the term “radius area” within the definition of “public school.” When questioned about the meaning, Marisa Button, Florida Housing’s Director of Multifamily Allocations, stated she did not know, but “[I] assume it means if the charter school has a radius area. I don’t know.”8/ The term “radius” is defined as “a bounded or circumscribed area.” Merriam-Webster Online, www.merriam- webster.com (2018). The bounded or circumscribed area for admission to the Manatee School is the Manatee County School District, pursuant to its contract. The Manatee School is open to appropriately-aged children in the radius area who apply. The Manatee School does not apply additional requirements for admission, such as passing an entrance exam or audition, payment of fees or tuition, or demographic diversity considerations.9/ The Manatee School does provide admissions preferences to students of active duty military personnel, siblings of a student already enrolled, siblings of an accepted applicant, children of an employee of the School, and children of a charter board member. Each of these preferences is authorized pursuant to section 1002.33(10)(d). The preferences are not additional requirements for admission to the Manatee School. The Manatee School meets the second part of the definition of “public school” for purpose of qualifying Oaks at Creekside to receive proximity points pursuant to the RFA. Harper’s Pointe Madison Oaks argues Harper’s Pointe is ineligible for funding pursuant to the RFA because the Harper’s Pointe development site is a “scattered site,” and Harper’s Pointe did not identify the site as such and comply with the RFA requirement to designate latitude and longitude coordinates for both sites.10/ Rule 67-48.002(105) defines “scattered sites” as follows: (105) “Scattered sites,” as applied to a single Development, means a Development site that, when taken as a whole, is comprised of real property that is not contiguous (each such non-contiguous site within a Scattered Site Development, is considered to be a “Scattered Site”). For purposes of this definition “contiguous” means touching at a point or along a boundary. Real property is contiguous if the only intervening real property interest is an easement, provided the easement is not a roadway or street. All of the Scattered Sites must be located in the same county. Section Four A.5.c. of the RFA states: “The Applicant must state whether the Development consists of Scattered Sites.” Section Four A.5.d. of the RFA requires that applicants provide latitude and longitude coordinates for the Development Location Point and any scattered sites. Section Five A.1. provides that “only items that meet all of the following Eligibility Items will be eligible for funding and consideration for funding selection.” Among the items listed are “Question whether a Scattered Sites Development answered” and “Latitude and Longitude Coordinates for any Scattered Site provided, if applicable.” Harper’s Pointe did not state in its application that the development consists of scattered sites, and did not provide separate latitude and longitude coordinates for scattered sites. Harper’s Pointe’s proposed development site, as identified in its Site Control Documents, consists of land located within a platted tract of property. The plat recorded in Alachua County indicates that the site is bisected by a platted 50-foot street easement running east/west through the property. The parties stipulated the street has never been constructed. Although portions of the east/west easement area show signs of having been improved at some time in the past, the easement area has never been paved, and is currently impassible by car or truck due to vegetation in the easement area. Even if the easement area were improved, there is no roadway to the west of the property to which it would connect. A fence runs along the property line and the property beyond the fence is platted residential lots accessed by Northeast 22nd Street. An existing roadway, Northeast 23rd Avenue, terminates at the eastern property line just south of the east/west easement. The City has placed barriers at that property line prohibiting access to the property from Northeast 23rd Avenue. If the platted street is a “roadway or street” as those terms are used in rule 67-48.002(105), the site would meet the definition of a “scattered site.” Ms. Button testified on behalf of Florida Housing that the property meets the definition of a scattered site because “there is an easement that is a road or a street” that bisects the property. Ms. Button first testified that Florida Housing’s determination did not depend on whether a roadway or street is actually constructed within the easement, but rather, “it goes back to the easement, whether there is an easement that is a roadway or street.” Ms. Button’s testimony seemed logical enough. If the easement were a street easement, access between the northern and southern portions of the development site would be constrained. By contrast, if the easement were a conservation or utility easement, there would be no impairment of access between portions of the development site. However, on cross examination, Ms. Button testified that, in making the determination whether an easement for a road or street existed, Florida Housing would consider a number of other factors, including whether a roadway was actually constructed within the easement, whether there were physical obstructions preventing access to the “prospective” roadway or street, and whether the public had a right to use the “prospective” roadway or street. Ms. Button did not testify with specificity what factors she considered in making the determination that the easement, in this case, was “a roadway or street.” Ms. Button’s direct-examination testimony was conclusory: “Based on the documentation we received, there is an easement that is a road or street.” On direct examination, her determination appeared to be based solely on the plat designation of a street easement. On cross-examination, however, Ms. Button testified that “a street designated . . . on a plat could be evidence of the existence of a scattered site.” (emphasis added). Moreover, Ms. Button testified that Florida Housing could consider whether a roadway or street was actually constructed, whether there were obstructions to its use, and whether the public had a right to use the purported roadway. Ms. Button’s testimony that the Harper’s Point development site was a scattered site was equivocal, and the undersigned does not accept it as either reliable or persuasive.11/ There is no physical roadway or street constructed within the easement. While there is some evidence that some portions of the easement area were improved in the past, said improvement was at least 25 years old. The current condition of the property is fairly heavily wooded. To the extent a “path” exists on the property, it is not passable by a standard four- wheeled vehicle. Moreover, there are physical barriers preventing vehicular access to the property from the adjoining street to the east. There is no access to the property from the residential development to the west of the property. There is not an improved area preventing access from the northern to the southern portion of the development site. There is no structure built within the easement which would have to be demolished in order to build the project on the development site as a single parcel. Based on the entirety of the reliable evidence, the Harper’s Pointe development site is not a “scattered site” as defined in the RFA. Madison Oaks failed to prove that Florida Housing’s initial determination to award tax credits to Harper’s Pointe, pursuant to the RFA, was incorrect.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing issue a final order finding (1) that its initial scoring decision regarding Sunset Lake was erroneous, and awarding funding to the applicant with the next highest lottery number; and (2) awarding funding to Oaks at Creekside and Harper’s Pointe, pursuant to its initial scoring decision. DONE AND ENTERED this 23rd day of August, 2018, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 2018.
The Issue The issues in this bid protest are whether, in making the decision to award funding pursuant to Request for Applications 2017-103, Housing Credit and State Apartment Incentive Loan ("SAIL") Financing to Develop Housing in Medium and Large Counties for Homeless Households and Persons with a Disabling Condition (the "RFA"), Florida Housing Finance Corporation ("Florida Housing" or "Respondent"), acted contrary to a governing statute, rule, or solicitation specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious. The question of whether the application of Northside Commons Residential, LLC ("Northside"), met the requirements of the RFA with respect to demonstrating the availability of water and sewer services as of the Application Deadline is the only question at issue in this case. No other parts of its Application are being challenged, and the parties all agree that its Application was otherwise properly scored. No parties have raised objections to any parts of Warley Park's application, and all parties agree that its Application was properly scored.
Findings Of Fact The Parties Petitioner Warley Park, Ltd., is the applicant entity of a proposed affordable housing development to be located in Seminole County, Florida. Petitioners Warley Park Developer, LLC, and Step Up Developer, LLC, are Developer entities as defined by Florida Housing in Florida Administrative Code Rule 67-48.002(28). Northside is a Florida limited liability company based in Miami-Dade County, Florida, in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The Programs The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect of this is to reduce the amount that the developer would have to borrow otherwise. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of up 50 years as consideration for receipt of the tax credits. SAIL provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development. SAIL dollars are available to individuals, public entities, not-for-profit, or for-profit organizations that propose the construction or substantial rehabilitation of multifamily units affordable to very low-income individuals and families. Florida Housing is authorized to allocate housing tax credits, SAIL funding, and other funding by means of request for proposal or other competitive solicitation in section 420.507(48) and adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which were made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). The RFA 2017-103 Housing tax credits and SAIL funding are made available through a competitive application process commenced by the issuance of a RFA. A RFA is equivalent to a "request for proposal" as indicated in rule 67-60.009(3). The RFA at issue here is RFA 2017-103, which was issued on March 22, 2017. A modification was issued on April 11, 2017, and responses were due April 20, 2017. Through the RFA, Florida Housing seeks to award up to an estimated $6,075,000 of housing tax credits, along with $11,500,000 of SAIL financing, to qualified applicants to provide affordable housing developments. A review committee, made up of Florida Housing staff, reviews and scores each application. Florida Housing scored applicants in six areas worth a total of 145 points: General Development Experience; Management Company Experience with Permanent Supportive Housing; Tenant Selection for Intended Residents; Community-Based General Services and Amenities Accessible to Tenants; Access to Community-Based Resources and Services that Address Tenants' Needs; and Approach Toward Income and Credit Status of Homeless Households Applying for Tenancy. Florida Housing scored Northside as the highest scoring applicant, awarding it 128 points. Warley Park was the fourth highest scored applicant with 112 points. These scores are presented in a public meeting and the committee ultimately makes a recommendation as to which projects should be funded. This recommendation is presented to Florida Housing's Board of Directors ("the Board") for final agency action. On June 16, 2017, Petitioners and all other participants in RFA 2017-103 received notice that the Board had determined which applications were eligible or ineligible for consideration for funding and selected certain applications for awards of tax credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets, one listing the "eligible" and "ineligible" applications and one identifying the applications that Florida Housing proposed to fund, on Florida Housing's website, www.floridahousing.org. Florida Housing announced its intention to award funding to three developments, including Northside. Warley Park's application was deemed eligible, but it was not selected for funding. The RFA at Section Four A.5.g. requires the applicant to demonstrate its "Ability to Proceed" by including the following as attachments to its application: Availability of Water. The Applicant must demonstrate that as of the Application Deadline water is available to the entire proposed Development site by providing as Attachment 9 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16); or A letter from the water service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. Availability of Sewer. The Applicant must demonstrate that as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site by providing as Attachment 10 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16); or A letter from the waste treatment service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. (emphasis added). Section 5.g. of Exhibit A to RFA 2017-103, the Application and Development Cost Pro Forma, requires that the applicant include the following information: Ability to Proceed: As outlined in Section Four A.5.g. of the RFA, the Applicant must provide the following information to demonstrate Ability to Proceed: Availability of Water. The Applicant must provide, as Attachment 9 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16). Availability of Sewer. The Applicant must provide, as Attachment 10 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16). The Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form requires the service provider to certify that on or before the submission deadline for the RFA, "Sewer Capacity or Package Treatment is available to the proposed Development." Similarly, the Verification of Availability of Infrastructure – Water form requires the service provider to certify that on or before the submission deadline for the RFA, "Potable water is available to the proposed Development." Each form also includes the following caveat: To access such [waste treatment] [water] service, the Applicant may be required to pay hook-up, installation and other customary fees, comply with other routine administrative procedures, and/or install or construct line extensions and other equipment, including but not limited to pumping stations, in connection with the construction of the Development. The RFA does not define the term "Development- specific," and the term is not used in Section 5.g. of Exhibit A to RFA 2017-103 where the requirement for the water and sewer letters is included. Further, the term "Development-specific" is not defined in any Florida Housing rule. Miami-Dade County has had a longstanding practice of refusing to complete Florida Housing's water and sewer verification forms. Florida Housing added the water and sewer letter as an additional method to demonstrate availability in light of the county's refusal. Thus, an applicant, such as Northside, has no alternative when proposing a Miami-Dade project other than providing a water and sewer letter as opposed to Florida Housing's Verification form. Northside's Water and Sewer Letter Accordingly, in response to this RFA requirement, Northside submitted a letter from Miami-Dade County Water and Sewer Department as Attachment 9 to its application. The letter was sought by Oscar Sol, one of the principals of the developer working with the applicant in the project at issue in this case. The WASA letter at issue in this case was dated December 12, 2016. It was addressed to "Northside Commons LTD," and referenced water and sewer availability for "Northside Commons," construction and connection of 108 apartments, located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The identical WASA letter was submitted as Attachments 10 and 11 to application 2017-155C in response to a prior RFA, RFA 2016-114. That prior application was submitted by Northside Commons, Ltd., for a 108-unit elderly development called Northside Commons, located at 8301 Northwest 27th Avenue, Miami- Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2016-114 was December 15, 2016. In the present case, Northside's application for RFA 2017-103, application 2017-254CSN, was submitted by Northside Commons Residential, LLC. It was for an 80-unit development for homeless persons and persons with disabling conditions, also to be called "Northside Commons," located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2017-103 was April 20, 2017. The WASA letter contains several paragraphs of details about hookups to water and sewer service, and also includes the following boilerplate language: "This letter is for informational purposes only and conditions remain in effect for thirty (30) days from the date of this letter. Nothing contained in this letter provides the developer with any vested rights to receive water and/or sewer service." Warley Park raised three issues regarding the WASA letter. First, was the letter valid for more than 30 days after it was signed? Second, did the letter meet the requirement of the RFA that it be "development specific?" Third, did the letter demonstrate the availability of sewer services? Was the WASA letter valid for more than 30 days after it was signed? Florida Housing and Northside contend that there is no provision in the WASA letter stating that it becomes "invalid" after 30 days, or that water and sewer services will not be available after 30 days. Douglas Pile, the representative for Miami-Dade County, testified that the second and third paragraphs of the letter included the conditions necessary to service the availability of water and sewer, and that it was these conditions that remained in effect for 30 days. He described the purpose of the 30-day language as follows: We're not saying that availability disappears or terminates after 30 days. We're just saying this letter is good for informational purposes for 30 days. We don't want people to come back a year later and say I bought this property based upon this letter of availability saying I have water and sewer under certain conditions, and then a year later the conditions are different and maybe they have to put in a water main extension or maybe their local pump station is in moratorium. When asked specifically whether the entire letter was valid for only 30 days, he responded, "Right. Well, the conditions are – the nearby water and sewer facilities that the project would connect to." Mr. Pile explained that the letter is "a snapshot of what our facilities are at the time they make the request." He further stated that: the letter . . . has to have an expiration date either explicit or implicit. If a utility is going to give a letter saying they have water and sewer availability, that cannot be forever, you know. You assume a natural termination point . . . we just explicitly say this letter is good for 30 days. In its Pre-Hearing Position Statement, Florida Housing argued that it did not interpret this language to mean that the letter became invalid after 30 days. However, according to Mr. Reecy,1/ there was no "interpretation" done by Florida Housing. Specifically, when asked how Florida Housing interpreted the phrase, he stated: We have basically ignored that phrase. We actually do not know what--given the context of this situation, how, within 30 days, the--that information is only good for 30 days. So we have not considered that to be a relevant factor in our consideration of the information provided in the letter. A plain and common reading of the quoted language indicates Miami-Dade limited the validity of the information in the letters to 30 days. Florida Housing provided no explanation for its decision to ignore the language and made no attempt to inquire of Miami-Dade County as to what it intended by including the language. This 30-day limitation is generally known by the applicants and nearly every previously funded application included a letter from Miami-Dade County dated within 30 days of the application deadline. Only one Miami-Dade WASA letter submitted by applicants within the last two RFAs was dated outside of the 30-day window. That letter was deemed ineligible for other reasons. Had Petitioner wanted to demonstrate availability as of the application deadline, it only needed to request a letter from Miami-Dade County within the 30 days prior to the application deadline, giving Miami-Dade sufficient time to respond. In fact, the letter was initially submitted as part of a response to RFA 2016-114, with a due date of December 15, 2016. Because the letter was issued on December 12, 2016, it remained valid through the application deadline for RFA 2016-114. There is no limit to the number of times a developer can obtain a letter of availability from Miami-Dade County. The requirements of the RFA are clear that water and sewer availability must be shown "as of the Application Deadline." Because the WASA letter submitted with Petitioner's Application only provided a snapshot of availability for a 30-day window after the issuance of the letter (or until January 11, 2017), the letter failed to address the availability of water or sewer services as of April 20, 2017. As a practical matter, the WASA letter provides that water hook-up is readily available to existing infrastructure and sewer availability is dependent upon a developer building a pumping station. It could be inferred that these conditions would remain available at this location for 12 months. However, the testimony of Mr. Pile makes clear that Miami-Dade County is not willing to make that assumption for a period beyond 30 days due to the possibility of intervening events.2/ Presumably, this is why the vast majority of applicants for this type of RFA secures and provides a Miami-Dade WASA letter dated within 30 days of the RFA application deadline. Because the WASA letter was not valid beyond January 11, 2017, Petitioner cannot demonstrate availability of water and sewer as of the Application Deadline. The fact that the WASA letter was no longer valid is fatal to Petitioner's application in that it failed to satisfy a mandatory requirement of RFA 2017-103, i.e., the availability of water and sewer services. Was the WASA letter "development specific?" The RFA requires that the Applicant demonstrate water and sewer service availability for "the entire proposed Development site," and it also requires that the letter from the service provider be "Development-specific." The application in this matter was filed by Northside Commons Residential, LLC, for an 80-unit development for the homeless and persons with disabling conditions. However, the WASA letter was issued to, and discussed the availability of water and sewer service for, a different entity, Northside Commons, Ltd., the applicant for a 108-unit elderly development. According to Mr. Reecy, the reuse of a letter that was previously submitted in a different application does not follow the "letter" of the criteria in the RFA. Florida Housing and Northside even agree that the letter does not reference the specific proposed development that is at issue and instead focuses on the location of the proposed development. Mr. Sol, Northside's representative, suggested that it is "irrelevant" to which entity the letter is issued because what is relevant is whether water and sewer availability exists. However, as stated by Mr. Reecy, what Florida Housing considers when determining whether a letter of availability is "Development-specific" is the location, the number of units, and the applicant. Because the WASA letter was issued to a entirely different applicant, based upon Mr. Reecy's testimony, it is not "Development-specific." However, Mr. Reecy noted that such a letter could be considered a Minor Irregularity if there is some commonality between the applicant entities. Northside argues that the failure of the letter to be "Development-specific" should be waived as a Minor Irregularity. This issue was not considered during scoring, nor was it a determination made by the Board of Florida Housing prior to awarding funding to Northside. Mr. Reecy acknowledged that it is a judgment call when determining whether a letter addressed to a different entity with different principals is a Minor Irregularity. That call depends upon the number of common principals. While the number of principals that must be the same is discretionary, there must be at least some commonality of principals for it to be considered a Minor Irregularity. The principals of Northside Commons, Ltd., the entity to which the letter was actually issued and the applicant that originally submitted the WASA letter, are completely different from the principals of Northside Commons Residential, LLC. Despite a full understanding of all the similarities between the two applications and the differences in the requirements of the RFA and being given a number of opportunities to change his position, Mr. Reecy repeatedly declined to do so. Mr. Sol suggested that it is common practice for Florida Housing to accept letters issued to entities other than the applicant and with different principals. After hearing Mr. Sol's opinion and discussing the issue further with Northside, Mr. Reecy remained steadfast in his position that the error in the Letter could not be waived as a Minor Irregularity. At the request of Northside, Mr. Reecy agreed to review past practices of the agency during a break in the hearing. As stated by counsel for Florida Housing, if it is established that Florida Housing has a long-standing practice of accepting similar letters, then the question is whether Northside Commons may rely upon that practice. The review during the break was limited to the issue of whether Florida Housing had previously accepted Miami-Dade letters addressed to an entity who was not the applicant and who shared no principals in common with the applicant. No such long- standing practice was demonstrated. Mr. Reecy directed staff to pull all of the Miami-Dade letters of availability from the last two RFAs, to determine, first, whether or not there were sewer letters addressed to someone other than the applicant entity. Second, for those so identified, staff was to compare the principals of the applicant entity and the entity that was the addressee for commonality. Mr. Reecy was provided a list of approximately a dozen letters from the past several RFAs that compared the applicant entity and the addressee entity. This list did not identify whether or not the letters were submitted by successful credit applicants. Based upon this list, Mr. Reecy then reviewed each letter to determine whether or not it was issued to the applicant. He then reviewed the principals list for the applicant as identified in the application and compared that to data from the state of Florida's Sunbiz.org website for the addressee of the letter. Mr. Reecy compared this information to determine if the two had any principals in common. After reviewing this information, Mr. Reecy recanted his earlier testimony and stated that he felt that Florida Housing historically accepted letters with addressees that were not the applicant entity and did not have common principals. Mr. Reecy further testified that based upon this understanding of Florida Housing's past practice, the Northside's letter should be accepted. The information Mr. Reecy reviewed, specifically that obtained from the state of Florida's Sunbiz.org website, did not demonstrate, as Mr. Reecy believes, that Florida Housing previously accepted Miami-Dade WASA letters from applicants in a similar position to that of Northside. Notably, Florida Housing does not accept documentation from the Sunbiz.org website to demonstrate the principals of the Application as required by this and other RFAs. The Sunbiz.org website does not identify the level of detail of principals which Florida Housing requests in its "Principals of the Applicant and Developer(s) Disclosure Form". Further, even if Sunbiz.org did identify all of the principals Florida Housing requires to be disclosed, in this case, the Sunbiz.org information reviewed was dated 2017.3/ As this information was filed after the application deadlines for the respective RFAs, it fails to identify any of the principals related to the entities in the "comparable" letters for the 2015 and 2016 RFAs. No information was provided as to any of the principals in either 2015 or 2016. Accordingly, Mr. Reecy and Mr. Sol's belief that Florida Housing had previously accepted letters in a similar position to that of Northside Commons' letter has not been demonstrated. Because Mr. Reecy's new position, that Northside Commons' letter should be accepted, is based upon this incorrect understanding, and the alleged prior agency action was not demonstrated, Mr. Reecy's initial testimony is found to be more credible. Therefore, the record demonstrates that the WASA letter was not "Development-specific" and, therefore, contrary to the solicitation specifications. Did the letter demonstrate availability of sewer services? The RFA requires each applicant to provide a form or letter demonstrating that "as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site." Petitioner presented the testimony of Jon Dinges, P.E., an environmental engineer with expertise in designing wastewater systems who was accepted as an expert in civil engineering, specifically in the area of sewer infrastructure and design. Mr. Dinges' testimony was simply that the problem with the WASA letter in this case is that it does not actually say that capacity is available. In a prior RFA, Florida Housing rejected an application that included a Miami-Dade WASA letter because it specifically stated that no gravity sewer capacity analysis had been conducted. According to Mr. Dinges, without conducting a gravity sewer capacity analysis, it is not possible to determine whether capacity, if any, exists. However, the RFA makes no mention of requiring a gravity sewer capacity analysis to demonstrate availability. Mr. Reecy testified that Florida Housing has been accepting WASA letters without mention of gravity analysis from Miami-Dade County for many years. He stated that the detailed description of how a proposed project could connect to an existing sewer service met the requirement of the RFA that the Applicant demonstrate the availability of sewer service. He also testified that if Florida Housing were to change its position and determine that the form of the letter was not adequate to demonstrate capacity, it would do so in a public process. The testimony was clear that Florida Housing does not do any independent analysis of whether water and sewer service is actually available to a proposed development, but instead relies on the expertise of the local government to do this analysis. Applicants are not required to include or demonstrate the specific requirements or technical specifications of how a connection to water or sewer services will be made. This interpretation is consistent with the specifications of the RFA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order amending its preliminary decision awarding funding to Warley Park by: finding Northside ineligible for funding; and awarding funding to Warley Park as the next highest scoring eligible applicant. DONE AND ENTERED this 19th day of October, 2017, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 2017.
The Issue Whether Respondent, Florida Housing Finance Corporation's ("Florida Housing"), intended action to award housing tax credit funding to Intervenor, Las Brisas Trace, LP ("Las Brisas"), under Request for Applications 2018-111 Housing Credit Financing for Affordable Housing Developments Located in Miami-Dade County (the "RFA"), is contrary to governing statutes, rules, the RFA specifications, and clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Ambar is an applicant requesting an allocation of $2,700,000.00 in competitive housing tax credits. Ambar's application, assigned number 2019-035C, was deemed eligible for consideration, but was not preliminarily selected for funding. Las Brisas is an applicant requesting an allocation of $2,635,850.00 in housing tax credits. Las Brisas' application, assigned number 2019-073C, was deemed eligible for consideration and was preliminarily selected for funding. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes, whose address is 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301, and for the purposes of this proceeding, an agency of the State of Florida. Florida Housing's purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The low income housing tax credit program (commonly referred to as "housing tax credits") was enacted to incentivize the private market to invest in affordable rental housing. These housing tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that the credits reduce the amount that the developer would otherwise have to borrow. Because the total debt is lower, a housing tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the housing tax credits. The demand for housing tax credits provided by the federal government exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate housing tax credits, State Apartment Incentive Loan ("SAIL") funding, and other funding by means of requests for applications or other competitive solicitation in section 420.507(48), and Florida Administrative Code Chapter 67-60, which govern the competitive solicitation process for several different programs, including the program for housing tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which are made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of ten years. Applicants normally sell the rights to that future stream of income housing tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends upon the accomplishment of several factors, such as a certain percentage of the projected Total Development Cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. This, however, is not an exhaustive list of the factors considered. The RFA was issued on September 6, 2018, and responses were initially due October 25, 2018. The RFA was modified on September 25, 2018, October 4, 2018, and October 18, 2018. The application deadline was extended to November 9, 2018. No challenges were made to the terms of the RFA. Through the RFA, Florida Housing seeks to award up to an estimated $6,881,821.00 of housing tax credits to applicants that propose developments located in Miami-Dade County, Florida. Florida Housing received 67 applications in response to the RFA. A review committee was appointed to review the applications and make recommendations to Florida Housing's Board of Directors (the "Board"). The review committee found 61 applications eligible and six applications ineligible. Through the ranking and selection process outlined in the RFA, three applications were recommended for funding, including Las Brisas. To reflect its scoring decisions, the review committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On February 1, 2019, the Board met and considered the recommendations of the review committee. Also, on February 1, 2019, at approximately 9:20 a.m., Ambar and all other applicants received notice that the Board had determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of housing credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets on the Florida Housing website, www.floridahousing.org, one listing the "eligible" applications in the RFA and one identifying the applications which Florida Housing proposed to fund. In the February 1, 2019, posting, Florida Housing announced its intention to award funding to three applicants, including Las Brisas. Ambar and Las Brisas applied for funding to develop proposed developments in Miami-Dade County with the demographic commitment of Elderly, Non-ALF. Ambar was eligible, but not recommended for funding. Ambar timely filed a Notice of Protest and Petition for Formal Administrative Proceedings and Las Brisas timely intervened. THE RFA Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A list of the eligibility items is available in section 5.A.1, beginning on page 65 of the RFA. Only applications that meet all the eligibility items will be eligible for funding and considered for funding selection. The eligibility items also include Submission Requirements, Financial Arrearage Requirements, and the Total Development Cost Per Unit Limitation requirement. Applicants can earn points for each of the following items (for a total of 15 points): Submission of Principals Disclosure Form stamped by the Corporation as "Pre-Approved" (5 points), Development Experience Withdrawal Disincentive (5 points), and Local Government Contribution Points (5 points). All 67 applications for the RFA were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. On page 69, the RFA outlines its three goals: The Corporation has a goal to fund one (1) proposed Development that selected the Demographic Commitment of Family at question 2.a of Exhibit A and qualifies for the Geographic Areas of Opportunity/SADDA Goal as outlined in Section Four A.10. The Corporation has a goal to fund one (1) proposed Development that selected the Demographic Commitment of Elderly (ALF or Non-ALF) at question 2.a. of Exhibit A. ["Elderly Demographic Goal"]. The Corporation has a goal to fund one (1) proposed Development wherein the Applicant applied and qualified as a Non- Profit Applicant. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. For example, if a Development is selected for the Elderly Demographic goal but also qualifies for the Non-Profit goal, the Development will only count towards the Elderly Demographic goal and another Development will be considered for the Non- Profit goal. As part of the funding selection process, the RFA starts with the application sorting order. The highest scoring applications are determined by first sorting together all eligible applications from the highest score to lowest score, with any scores that are tied separated as follows: First, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.11.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4(b)(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's Leveraging Classification, applying the multipliers outlined in item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Application's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and And finally, by lottery number, resulting in the lowest lottery number receiving preference. Beginning on page 70, the RFA outlines the funding selection process: The first Application selected for funding will be the highest ranking eligible Family Application that qualifies for the Geographic Areas of Opportunity/SADDA Goal. The next Application selected for funding will be the highest ranking eligible Application that qualifies as an Elderly (ALF or Non-ALF) Development. The next Application selected for funding will be the highest ranking Application wherein the Applicant applied and qualified as a Non Profit Applicant. If there are less than three (3) Applications selected for funding in (1), (2), and (3) above, the next Application(s) selected for funding will be the highest ranking unfunded Application(s), regardless of Demographic Category until no more than three (3) total Applications are selected for funding. If the third Application cannot be fully funded, it will be entitled to receive a Binding Commitment for the unfunded balance. If funding remains after selecting the three (3) highest ranking eligible unfunded Applications as outlined above, or if funding remains because there are not three (3) eligible Applications that can be funded as outlined above, then no further Applications will be considered for funding and any remaining funding will be distributed as approved by the Board. According to the terms of the RFA: Funding that becomes available after the Board takes action on the [Review] Committee's recommendation(s), due to an Applicant withdrawing its Application, an Applicant's declining its invitation to enter credit underwriting or the Applicant's inability to satisfy a requirement outlined in this RFA, and/or Rule Chapter 67-48, F.A.C., will be distributed as approved by the Board. Las Brisas' Application In response to the RFA, Las Brisas timely submitted its application to develop a 119-unit affordable, elderly development in Miami-Dade County. Florida Housing determined that the Las Brisas application was eligible for an award of housing tax credits and and preliminarily selected the Las Brisas application for an award of housing tax credits. Las Brisas was selected to meet the Elderly Demographic Goal. Ambar contests Florida Housing's preliminary selection of Las Brisas for an award of housing tax credits. If the Las Brisas application is either ineligible or remains eligible but loses five points, then according to the ranking and selection process in the RFA, Ambar's application will be selected for funding as the next highest ranking eligible application. Principals Disclosure Form In its challenge, Ambar argues that Las Brisas failed to correctly complete its Principals Disclosure Form by not identifying the multiple roles of its disclosed principals. Specifically, Ambar argues that Las Brisas failed to list Steve Protulis, who is disclosed as executive director, as an officer as well. Additionally, Ambar argues that Las Brisas' disclosure of Christopher M. Shelton, Morton Bahr, Edward L. Romero, Leo W. Gerard, Maria C. Cordone, and Erica Schmelzer as officers is insufficient because they were also not listed as directors. Accordingly, Ambar contends Las Brisas is not eligible or should lose five points. Significantly, Ambar does not argue that Las Brisas failed to disclose a principal. As an eligibility item, the RFA requires that applicants identify their "Principals" by completing and submitting with their applications a Principals Disclosure Form as follows: Eligibility Requirements To meet the submission requirements, the Applicant must upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 08-16)("Principals Disclosure Form") with the Application and Development Cost Pro Forma, as outlined in Section Three above. The Principals Disclosure Form must identify the Principals of the Applicant and Developer(s) as of the Application Deadline and should include, for each applicable organizational structure, only the types of Principals required by Subsection 67-48.002, F.A.C. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. The RFA states that unless otherwise defined, capitalized terms within the RFA have the meaning as set forth in Exhibit B, in chapters 67-48 and 67-60, or in applicable federal regulations. Rule 67-48.002(94) defines the term "Principal." The rule is organized first by the applicant or developer entity, then by the organizational structure of those specific entities. According to rule 67-48.002(94)(a)2., with respect to any applicant that is a limited partnership, any general partner or limited partner must be disclosed. Because the general partner of Las Brisas is a corporation, additional disclosures are required. Principals at the second disclosure level pursuant to rule 67-48.002(94)(a)2. include "any officer, director, executive director, or shareholder of the corporation." Ms. Button, Director of Multifamily Programs for Florida Housing, testified that Florida Housing defined the term principals this way so that it could know the individuals that have control and oversight over the entities themselves in order to determine whether any individuals associated with a proposed development are in arrears or indebted to Florida Housing in connection with other developments. The RFA also enabled an applicant to obtain points by participating in Florida Housing's Advance Review Process as follows: Point Item Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped "Approved" during the Advance Review Process provided (a) it is still correct as of Application Deadline, and (b) it was approved for the type of funding being requested (i.e., Housing Credits or Non- Housing Credits). The Advance Review Process for Disclosure of Applicant and Developer Principals is available on the Corporation's Website http://www.florida housing.org/programs/developers-multifamily programs/competititve/2018/2018-111 (also accessible by clicking here) and also includes samples which may assist the Applicant in completing the required Principals Disclosure Form. Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. In order to assist applicants with identifying the correct types of principals that should be identified for each entity, Florida Housing offers applicants the opportunity to have the Principals Disclosures Form reviewed by staff in the Advance Review Process. The Advance Review Process is a continuous, ongoing process that is not specific to any RFA. The RFA provides a link that directs applicants to information regarding the Advance Review Process including instructions, rule definitions, terms and conditions, sample charts and examples, the Principals Disclosure Form, and Frequently Asked Questions ("FAQ"). The RFA states that the information contained within the link "includes samples which may assist the Applicant in completing the required Principals Disclosure Form." Part of the information about the Advance Review Process that is linked in the RFA is a Principals of the Applicant and Developer(s) Disclosure Form Frequently Asked Questions document that was updated on September 4, 2018 (the "2018 FAQ"). Question 6 of the 2018 FAQ provides: Q: If a person has multiple roles within the organizational structure, must they be listed multiple times--once for each role? A: For a Corporation, if a person serves multiple roles they may be listed once with the other role(s) identified next to the name of the individual. For example, John Smith serves as both an officer and director for ABC, Inc. You may choose the option of "director" in the drop-down menu and enter "officer" after his name as follows: Smith, John (officer). A prior version of the FAQ was updated on November 10, 2016 (the "2016 FAQ") and was replaced by the 2018 FAQ. The 2016 FAQ was not linked within the RFA. Question 8 of the 2016 FAQ provided: Q: If a person has multiple roles within the organizational structure, must they be listed multiple times--once for each role? A: Yes. Ms. Button persuasively and credibly testified that the purpose of the frequently asked questions is to help applicants understand what information Florida Housing is seeking from the applicants, and that the update to the 2016 FAQ was made because requesting applicants to list multiple roles of its principals did not further Florida Housing's goals. Thus, the intent of Question 6 of the 2018 FAQ and Florida Housing's answer was to communicate to applicants that they may, but were not required to, list the multiple roles of a principal of a corporation. Ms. Button persuasively and credibly testified that Florida Housing intentionally changed its position in Question 6 of the 2018 FAQ from the "hard-and-fast requirement" of Question 6 of the 2016 FAQ. The 2018 FAQ was not the only resource linked within the RFA for applicants to reference when completing the Principals Disclosure Form. Also linked within the RFA was the Continuous Advance Review Process for Disclosure of Applicant and Developer Principals, which includes disclosure instructions, rule definitions, and sample charts and examples. These resources included guidance and examples of Principals Disclosure Forms where principals, who held multiple roles, were listed twice. However, both of these resources pre-date the 2018 FAQ, which was last updated September 4, 2018, approximately two months before the applications in response to the RFA were due. At hearing, Ms. Button acknowledged the discrepancy between the instructions and guidance to the Principals Disclosure Form and the 2018 FAQ. Ms. Button explained that when the FAQ was updated in 2018, the other documents were not updated to reflect Florida Housing's change of position. Ms. Button persuasively and credibly testified that Florida Housing considers the most updated guidance to control, and where there is a conflict with Florida Housing's guidance, the least restrictive guidance controls. Las Brisas participated in the Advance Review Process, and on or about October 17, 2018, Florida Housing approved the Principals Disclosure Form submitted by Las Brisas during the Advance Review Process for an award of housing credits. Florida Housing, by approving the Las Brisas Principals Disclosure Form, relied on the information provided, and concluded that Las Brisas identified the appropriate type of principals for an award of housing tax credits and the appropriate type of principals for the corresponding type of entities as provided in rule 67-48.002(94). Florida Housing's approval of Las Brisas' Principals Disclosure Form during the Advance Review Process did not verify the accuracy of the information contained within the Principals Disclosure Form, but rather, verified that the appropriate type entities were disclosed for the organizational structures listed. The Principals Disclosure Form submitted with Las Brisas' application was the same document in all respects that was approved by Florida Housing during the Advance Review Process. Las Brisas' Principals Disclosure Form for the applicant lists Las Brisas Trace, LP, as the applicant entity that is a limited partnership. EHDOC Las Brisas Trace Charitable Corporation is listed as the general partner of the applicant at the first principal disclosure level. Las Brisas also lists two limited partners at the first disclosure level that are not at issue in this proceeding. At the second principal disclosure level for principals of the applicant, EHDOC Las Brisas Charitable Corporation identified 18 natural persons as principals. Steve Protulis is listed as the executive director. Christopher M. Shelton, Morton Bahr, Edward L. Romero, Leo W. Gerard, Maria C. Cordone, and Erica Schmelzer are identified as officers. Mary Anderson, Maxine Carter, Eric Dean, Ellen Feingold, Tony Fransetta, Robert Martinez, Lou Moret, John Olsen, Cecil Roberts, Roger Smith, and Thomas P. Villanova are identified as directors. Because Las Brisas applied as a non-profit, it had to include additional information with its application that other applicants did not. This information was included in Attachment 3 to Las Brisas' application. Among the information included was a list of the names and addresses of the members of the governing board of the non-profit entity. This list of names and addresses of the governing board of the non-profit entity, EHDOC Las Brisas Trace Charitable Corporation, shows that Steve Protulis, Christopher M. Shelton, Morton Bahr, Edward L. Romero, Leo W. Gerard, Maria C. Cordone, and Erica Schmelzer are also directors. Thus, within the four corners of the application, Florida Housing could determine with whom it was doing business and what roles those individuals held. Ms. Button persuasively and credibly testified that Las Brisas' Principals Disclosure Form did not contain any errors and was complete. As further testified to by Ms. Button, even if Las Brisas' failure to list the multiple roles of its disclosed principals on the Principals Disclosure Form is an error, it is so minor as to constitute a waivable, minor irregularity because Florida Housing has the required information in the application, and there was no competitive advantage to Las Brisas. Public Housing Authority Question Question 10 of Exhibit A to the RFA states the following ("the Public Housing Authority Question"): f. Public Housing Authority as a Principal of the Applicant Entity Is a Principal of the Applicant Entity a Public Housing Authority and/or an instrumentality of a Public Housing Authority? Choose an item. If the Principal of the Applicant Entity is an instrumentality of a Public Housing Authority, state the name of the Public Housing Authority: Click here to enter text. In its application, Las Brisas did not provide an answer to the Public Housing Authority Question. The Public Housing Authority Question is not an eligibility item of the RFA. The purpose of the Public Housing Authority Question is to cross-reference if applicants are requesting an add-on bonus ("boost") to the Total Development Cost limit that is available to public housing authorities or instrumentalities of public housing authorities. Las Brisas clearly indicated in the Development Cost Pro Forma, which was part of its application, that it was not seeking the boost. Although Las Brisas did not answer the Public Housing Authority Question, it did not request a boost to the Total Development Cost Per Unit Limitation for being a public housing authority or an instrumentality of a public housing authority. Accordingly, the Public Housing Authority Question was simply not applicable to Las Brisas' application. Las Brisas' failure to answer the Public Housing Authority Question did not result in the omission of any material information or create any competitive advantage. The persuasive and credible testimony of Ms. Button demonstrates that Las Brisas' failure to answer the Public Housing Authority Question is a waivable, minor irregularity.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order dismissing the protest of Ambar Riverview, Ltd., and award housing tax credits to Las Brisas Trace, LP. DONE AND ENTERED this 21st day of May, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 2019. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC 1725 Capital Circle Northeast, Suite 304 Tallahassee, Florida 32308 (eServed) Amy Wells Brennan, Esquire Manson Bolves Donaldson Varn, P.A. 109 North Brush Street, Suite 300 Tampa, Florida 33602 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 (eServed) Michael George Maida, Esquire Michael G. Maida, P.A. 1709 Hermitage Boulevard, Suite 201 Tallahassee, Florida 32308 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson Varn 106 East College Avenue, Suite 820 Tallahassee, Florida 32301 (eServed) Kristen Bond, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 (eServed) Seann M. Frazier, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 (eServed) Marc Ito, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Hugh R. Brown, General Counsel Florida Housing Finance Company 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Corporation Clerk Florida Housing Finance Company 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
The Issue At issue in this proceeding is whether the decision of the Florida Housing Finance Corporation (“Florida Housing”) to award State Apartment Incentive Loan (“SAIL”) funding to Intervenor, La Joya Estates, Ltd. (“La Joya”), pursuant to Request for Applications 2015-112 (the “RFA”) was contrary to the agency’s governing statutes, rules, policies, or the RFA specifications.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: Douglas Gardens is a Florida limited partnership based in Coconut Grove, Florida, that is in the business of providing affordable housing. Florida Housing is a public corporation organized pursuant to chapter 420, Part V, Florida Statutes. For the purposes of this proceeding, Florida Housing is an agency of the State of Florida. Florida Housing has the responsibility and authority to establish procedures for allocating and distributing various types of funding for affordable housing. One of the programs administered by Florida Housing is the SAIL program, created in section 420.5087, Florida Statutes. Florida Housing has adopted Chapter 67-60, Florida Administrative Code, which governs the competitive solicitation process for several programs, including the SAIL program. Other administrative rule chapters relevant to the selection process are chapter 67-48, F.A.C., which governs competitive affordable multifamily rental housing programs; chapter 67-21, Florida Administrative Code, which governs multifamily mortgage revenue bonds ("MMRB") and non-competitive housing credits; and chapter 67-53, Florida Administrative Code, governing compliance procedures. Applicants for funding, pursuant to the RFA, are required to comply with provisions of the RFA and the applicable rule chapters. La Joya is a Florida limited partnership based in Miami, Florida, and is also in the business of providing affordable housing. On October 9, 2015, Florida Housing issued the RFA, seeking applications from developers proposing to construct multifamily housing for families and for the elderly. The RFA outlined a process for the selection of developments to share the estimated $49 million in funding for eligible applicants. Among the stated goals of the RFA is to fund one new construction development serving the elderly in a large county, with priority given to the highest ranked eligible new construction application for the elderly that is located in Miami-Dade County. The RFA provides that if there are no eligible Miami-Dade County applications that qualify, then the highest ranking eligible new construction development serving the elderly in Broward County will be selected. A total of 23 applications were filed in response to the RFA. On November 9, 2015, Douglas Gardens timely submitted its Application, numbered 2016-177BS, seeking $5,781,900 in SAIL funding to assist in the development of a proposed new construction development for the elderly in Broward County. Douglas Gardens’ was the only “new construction” application submitted for Broward County. Also on November 9, 2015, La Joya timely filed its Application, numbered 2016-178S, seeking $5,778,100 in SAIL funding to assist in the development of a proposed new construction development for the elderly in Miami- Dade County. La Joya’s was the only application submitted for Miami-Dade County in any development category. The executive director of Florida Housing selected a review committee to review and score the applications. The review committee issued a recommendation of preliminary rankings and allocations. Florida Housing’s Board of Directors approved these recommendations on December 11, 2015. The Board of Directors found both La Joya and Douglas Gardens eligible for funding, but awarded funding to La Joya on the basis that it was the highest ranked, eligible, elderly, new construction application located in Miami-Dade County. On December 16, 2015, Douglas Gardens timely filed a notice of intent to protest. On December 28, 2015, Douglas Gardens timely submitted a Formal Written Protest and Petition for Administrative Hearing. The RFA awarded up to 18 “proximity points” to an applicant based on its project’s location in relation to transit and community services such as grocery stores, medical facilities, and pharmacies. The RFA required each applicant to submit a “Surveyor Certification” form, which included longitude and latitude coordinates corresponding to the location of the proposed development site and the site’s proximity to listed services that would presumably serve the proposed development. Each applicant was required to retain a Florida licensed surveyor to prepare and submit the Surveyor Certification form and to sign the form attesting, under penalty of perjury, that the information on the form is true and correct. In the bottom left hand corner of each page of the form is a blank line on which the applicant or surveyor was to indicate the RFA number for which the form was being submitted. Beneath the blank line is a parenthetical indicating the identification number of the form, e.g., (Form Rev. 07-15). Section Four A.6.a.(1) of the RFA provided the following regarding the Surveyor Certification form: In order to meet the Mandatory requirement and be eligible for proximity points, all Applicants must provide an acceptable Surveyor Certification form, (Form Rev. 07- 15), as Attachment 14 to Exhibit A, reflecting the information outlined below. The Surveyor Certification form (Form Rev. 07-15) is provided in Exhibit B of this RFA and on the Corporation’s website Note: The Applicant may include the Florida Housing Surveyor Certification form that was included in a previous RFA submission for the same proposed Development, provided (i) the form used for this RFA is labeled Form Rev. 07-15, (ii) other than the RFA reference number on the form, none of the information entered on the form and certified to by the signatory has changed in any way, and (iii) the requirements outlined in this RFA are met. The previous RFA number should be crossed through and RFA 2015-112 inserted. If the Applicant provides any prior version of the Surveyor Certification form, the form will not be considered. (Emphasis added). Section Three C.1. of the RFA provided that Florida Housing reserved the right to waive “Minor Irregularities” in the applications. Florida Administrative Code Rule 67-002(6) defines “Minor Irregularity” as variation in a term or condition of an Application pursuant to this rule chapter that does not provide a competitive advantage or benefit not enjoyed by other Applicants, and does not adversely impact the interests of the Corporation or the public. Florida Administrative Code Rule 67-60.008 titled “Right to Waive Minor Irregularities,” provides as follows: The Corporation may waive Minor Irregularities in an otherwise valid Application. Mistakes clearly evident to the Corporation on the face of the Application, such as computation and typographical errors, may be corrected by the Corporation; however, the Corporation shall have no duty or obligation to correct any such mistake. La Joya submitted a Surveyor Certification form as Attachment 14 of its Application. The identification number in the parenthetical in the bottom left hand corner was “(Form Rev. 10-14)” rather than the specified “(Form Rev. 07-15).” Form Rev. 10-14 was the Surveyor Certification form used for 2014 applications. The only difference between Form Rev. 10-14 and Form Rev. 07-15 is that the latter contains a revised list of location coordinates for several Sun Rail stations in the Orlando area. This difference was of no matter to the RFA under discussion. For the substantive purposes of this RFA, the forms were identical. If La Joya’s Surveyor Certification form had not been considered and not scored, La Joya would have been ineligible for funding and Douglas Gardens would have been selected as the applicant meeting Florida Housing’s goal of funding one new construction development for elderly residents in a large county. Heather Boyd, multifamily loan manager for Florida Housing, sat on the review committee and was assigned to score the proximity portion of the applications. Based on the distances provided in the Surveyor Certification form, Ms. Boyd awarded La Joya a total of 11.5 proximity points as follows: 5.5 points for proximity for Public School Bus Rapid Transit Stop, 3 points for proximity to a Grocery Store, and 3 points for proximity to a Medical Facility. (La Joya also included coordinates for a Public School, but the proposed elderly development was not eligible for Public School proximity points.) To be considered eligible for funding, an applicant needed to receive at least 10.25 proximity points, including at a minimum 2 points for Transit Services. No issue was raised as to the accuracy of the information submitted by La Joya or of Ms. Boyd’s calculation. If it was permissible to consider La Joya’s Surveyor Certification form, then La Joya satisfied the proximity requirements in the RFA and was properly awarded funding. If La Joya’s Surveyor Certification form had been rejected, La Joya would not have been awarded funding and Douglas Gardens would have been awarded funding. Florida Housing’s decision to award funding to La Joya was based in part on Ms. Boyd’s scoring of the Surveyor Certification form and reflected the agency’s support of Ms. Boyd’s action. However, during the pendency of Douglas Gardens’ protest, Florida Housing changed its position and determined that La Joya’s Surveyor Certification form should not have been considered, based on the mandatory language of section Four A.6.a.(1) of the RFA. Ms. Boyd testified that she did not notice that La Joya’s Surveyor Certification form was a prior version and that she scored it as if it were the current version. She testified that she should not have scored the form “[b]ecause it specifically says in the RFA, if they do not have the correct form, they will not be considered.” Jean Salmonsen, housing development manager, acted as a backup to Ms. Boyd in reviewing the Surveyor Identification forms and verifying the award of proximity points. Ms. Salmonsen testified that she, too, missed the fact that La Joya had filed the wrong version of the form and that she would have rejected the form had she correctly recognized it. Evidence presented at the hearing indicated that in January 2016, Ms. Salmonsen had in fact disqualified an application in a different RFA for submitting the 2014 version of the Surveyor Identification form. Several valid policy reasons were cited for the RFA’s requirement that applicants use only the current version of the Surveyor Identification form. Ken Reecy, Florida Housing’s Director of Multifamily Programs, testified that it is important to apply the rules and RFA criteria in a consistent manner because of the tremendous volume of applications the agency receives. Mr. Reecy stated, “For like criteria, yes, consistency. We live and die by consistency, frankly.” As to the Surveyor Certification form specifically, Mr. Reecy explained that over the years Florida Housing had used a number of different forms with different contents. Allowing applicants to submit different forms would add to the difficulty of scoring the hundreds of applications received from around the state. Uniformity and consistency as to applicant submissions allow Florida Housing to process all of these applications in a cost efficient manner. Though he expressed his concern with consistency of review and ensuring that all applicants provide the same information as reasons for rejecting La Joya’s submission of the 2014 Surveyor Certification form, Mr. Reecy conceded that one of the reasons Florida Housing moved away from the previous rigid Universal Application Cycle allocation process was to allow for flexibility in determining that insignificant scoring errors need not be the basis for disqualifying an otherwise acceptable application. Florida Housing’s recent adoption in 2013 of the “Minor Irregularity” rule is further indication of its intent to employ more flexible evaluation criteria than it has in the past. See Findings of Fact 14 and 15, supra. Mr. Reecy acknowledged that in the instant case, the substance of the 2014 and 2015 Surveyor Certification forms was identical, and that the information provided by La Joya using the 2014 form was the same information required by the 2015 form.
Recommendation Based on the foregoing, it is RECOMMENDED that a final order be entered by the Florida Housing Finance Corporation dismissing the Formal Written Protest and Petition for Administrative Hearing filed by Douglas Gardens V, Ltd., and finding that La Joya, Ltd. is eligible for funding under Request for Applications 2015-112. DONE AND ENTERED this 29th day of February, 2016, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of February, 2016.
The Issue Whether Florida Housing Finance Corporation’s (Florida Housing) intended decision to award Respondent, Brixton Landing, Ltd., low-income housing tax credits is contrary to Florida Housing’s governing statutes, rules, or the solicitation specifications.
Findings Of Fact Respondent, Florida Housing, is a public corporation created pursuant to section 420.504, Florida Statutes (2015). Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Petitioners, Madison Hollow, LLC, and American Residential Development, LLC (Madison Hollow or Petitioners), are Florida limited liability corporations engaged in the business of affordable housing development. Brixton Landing, is a Florida limited liability corporation also engaged in the business of affordable housing development. Florida Housing is the housing credit agency for the State of Florida within the meaning of section 42(h)(7)(a) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits, which are made available to the states annually by the United States Department of the Treasury. The State Housing Tax Credit Program is established in Florida under the authority of section 420.5093, Florida Statutes. Florida Housing is the designated entity in Florida responsible for allocating federal tax credits to assist in financing the construction or substantial rehabilitation of affordable housing. Because the demand for tax credits provided by the federal government far exceeds the supply available under the State Housing Tax Credit Program, qualified affordable housing developments must compete for this funding. On November 21, 2015, Florida Housing issued Request for Applications 2014-115, Housing Credit Financing for Affordable Housing Developments in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties (the RFA). No challenge was filed to the terms, conditions, or requirements of the RFA. According to the RFA, Florida Housing expected to award up to approximately $15,553,993 in tax credits for qualified affordable housing projects in those six large counties. Florida Housing received approximately 58 applications in response to the RFA. Madison Hollow, Brixton Landing, Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood timely submitted applications in response to the RFA requesting financing of their affordable housing projects from the funding proposed to be allocated through the RFA. Petitioners requested an allocation of $2,110,000 in annual tax credits for their development, Madison Hollow, located in Orange County. Brixton Landing requested an allocation of $1,330,000 in annual tax credits for Brixton Landing’s proposed development in Orange County. On May 8, 2015, the Board of Directors of Florida Housing approved the preliminary rankings and allocations, and issued its Approved Preliminary Awards/Notice of Intended Decision (Notice of Intended Decision), in which Florida Housing scored both Madison Hollow’s and Brixton Landing’s projects as eligible for funding and awarded each application 23 points. In addition, Sheeler Club Apartments, Sheeler Club Apartments- Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood were all found to be eligible applications. On that same date, Florida Housing published on its website the Notice of Intended Decision, which included a three- page spreadsheet listing all applications made in response to the RFA and identifying those which were eligible and ineligible. Ranking and Selection Process Applications were evaluated for eligibility and scoring by a Review Committee appointed by Florida Housing’s executive director. Applications were considered for funding only if they were deemed “eligible,” based on the terms of the RFA. Of the 58 timely-submitted applications, 52 were deemed eligible and six were deemed ineligible. The highest scoring applications were determined by first sorting all eligible applications from highest score to lowest score. Pursuant to the RFA, applicants could achieve a maximum score of 23 points. Eighteen (18) of those 23 points were attributable to “proximity” scores based on the distance of the proposed development from services needed by tenants. The remaining five points were attributable to Local Government Contributions. In scoring housing tax credit applications, many applicants achieved tie scores. In anticipation of that occurrence, Florida Housing designed the RFA and rules to incorporate a series of “tie breakers” to separate any scores that tied as follows: First by the Application’s eligibility for the “SAIL RFA 2014-111 Unfunded Preference”, which is outlined in Section One of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference). Next, by the Application’s eligibility for the Development Category Funding Preference which is outlined in Section Four A.5.c.(1)(a)(iii) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.12.e. of the RFA, (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next by the Application’s Leveraging Classification (applying the multipliers outlined in Exhibit C below and having the Classification of A be the top priority); Next by the Application’s eligibility for the Florida Job Creation Preference which is outlined in Exhibit C below (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and Finally by lottery number, resulting in the lowest lottery number receiving preference. The Leveraging Classification is essentially a ranking of eligible applications based upon the cost per unit (referred to in the RFA as Total Corporation Funding Per Set-Aside Unit), with the most cost-effective project at the top of the list and the least cost-effective at the bottom. The top 90 percent of applications on the list were classified as Group A and the bottom 10 percent of applications classified as Group B. Applicants in Group B are not eligible for funding until all applicants in Group A are funded. Pursuant to Item 9 of Exhibit C to the RFA, Florida Housing classified Brixton Landing and Madison Hollow in the Group A Leveraging Classification, and classified Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, and Lauderdale Place in the Group B Leveraging Classification. Both Brixton Landing and Madison Hollow were scored identically by Florida Housing, and both developments are located in Orange County. Because the RFA provided that only one project will be funded in each county, and because Brixton Landing had a lower lottery number than Madison Hollow, Brixton Landing was selected for funding. A total of 52 applications were found to be eligible for funding. According to the leveraging calculations, the Group B applications were removed from consideration for funding. Brixton Landing was number 45 on the list, thus classified in Group A. Brixton Landing will be moved to Group B classification, if at least two of the five applications in Group B are found to be ineligible. If Brixton Landing is moved into Group B, Madison Hollow will be eligible for funding. The Challenged Applications Madison Hollow alleges that the applications for Sheeler Club Apartments and Sheeler Club Apartments-Phase II should have each been found ineligible for failure to demonstrate the “ability to proceed” required in the RFA. Madison Hollow also alleges that the applications for Banyan Station and Lauderdale Place should have each been found ineligible for failure to fully disclose the principals of the applicant and developer.1/ Madison Hollow is thus in the unusual position of challenging four applicants who were not selected for funding and are not parties to this case. Brixton Landing is in the equally unusual position of defending the applications of those four unfunded applicants. Sheeler Club Atlantic Housing Partners (Atlantic) submitted two applications in response to the RFA. Sheeler Club Apartments was an application for development of affordable multifamily units to serve a family demographic. Sheeler Club Apartments- Phase II was an application for development of multi-family garden homes to serve an elderly demographic. The projects were proposed to be located adjacent to each other. The RFA sets forth the following specific requirements for applicants to demonstrate the ability to proceed: 5.f. Ability to Proceed: The Applicant must demonstrate the following Ability to Proceed elements as of Application Deadline, as outlined below. * * * Status of Site Plan Approval. The Applicant must demonstrate the status of site plan approval as of the Application Deadline by providing, as Attachment 7 to Exhibit A, the properly completed and executed Florida Housing Finance Corporation Local Government Verification of Status of Site Plan Approval for Multifamily Developments form (Form Rev. 11-14). Appropriate Zoning. The Applicant must demonstrate that as of the Application Deadline the proposed Development site is appropriately zoned and consistent with local land use regulations regarding density and intended use or that the proposed Development site is legally non-conforming by providing, as Attachment 8 to Exhibit A, the applicable properly completed and executed verification form: The Florida Housing Finance Corporation Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Form Rev. 11-14); or The Florida Housing Finance Corporation Local Government Verification that Permits are not Required for this Development form (Form Rev. 11-14). Similarly, the RFA requires applicants to submit forms to demonstrate availability of electricity, water, sewer, and roads to serve the proposed development. The Verification of Status of Site Plan Approval form (Site Plan form) must be completed by the local government official responsible for determination of issues related to site plan approval within the applicable jurisdiction. The official must choose between two optional paragraphs related to proposals for new construction: (1) the proposed development “requires additional site plan approval or similar process” and the “final site plan . . . was approved on or before the submission deadline for the” RFA; or (2) the proposed development “requires additional site plan approval or similar process” and either the jurisdiction requires preliminary or conceptual site plan approval, “which has been issued,” or (b) the jurisdiction provides neither preliminary nor conceptual site plan approval, “nor is any other similar process provided prior to issuing final site plan approval,” but the site plan, in the applicable zoning designation, has been reviewed. Orange County provides neither preliminary nor conceptual site plan approval. Thus, the local government official must certify that the site plan for the proposed project has been reviewed. The Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Zoning form), requires that the local government official responsible for issues related to comprehensive planning and zoning certify the following: (1) the zoning designation applicable to the property; (2) that the proposed number of units and intended use are consistent with current land use regulations and the zoning designation; (3) that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density proposed; and (4) that there are no known conditions that would preclude construction of the proposed development on the site. It is undisputed that Atlantic submitted both verification forms with its application. Olan Hill, Chief Planner for Orange County, reviewed, completed, and signed each of these forms, attesting that in his opinion both of the proposed projects would be in compliance with local zoning and land use regulations. Mr. Hill was fully authorized to sign the forms on behalf of Orange County. The two Atlantic projects are proposed adjacent to one another on a site which has a Planned Development (PD) zoning approval for development of 152 single-family townhome units in the Medium Density Residential Future Land Use category (MDR), which allows a maximum density of 20 units per acre. The County’s PD zoning approval was based on review of Atlantic’s Land Use Plan (LUP) for the site. According to Mr. Hill, the LUP is a “bubble plan” outlining the general entitlements and development program for the site. In the case at hand, the Atlantic site also has an approved preliminary subdivision plan (PSP), which is the first step to subdivide the property. Under the PSP, the property is proposed to be subdivided into 152 lots for development of single-family townhomes. For purposes of certifying the Site Plan and Zoning forms, Mr. Hill reviewed the PD LUP, not the PSP. Regarding the Site Plan form, Mr. Hill certified that, although the County requires no preliminary or conceptual site plan approval process and the final site plan approval has not yet been issued, the site plan for the project in the applicable zoning classification, the PD LUP, had been reviewed. With respect to the Zoning form, Mr. Hill first certified that the proposed number of units and intended use are consistent with current land use regulations and the PD zoning designation. The PD LUP limits the total number of units to 152, which would accommodate either of the Sheeler Club applications (Sheeler Club Apartments proposes 88 units, while Sheeler Club-Phase II proposes 64 units). The MDR land use category allows the multi-family uses proposed for the development up to 20 units per acre. Under the MDR category, the 21.4-acre site could be approved for well over 152 units. Mr. Hill next certified that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density described in that zoning classification. The PD zoning is final and is not dependent upon whether Atlantic goes forward with subdivision of the property as proposed in the existing PSP. Atlantic could subdivide the property for a different number of lots, or in a different configuration, without changing the zoning of the property. Finally, Mr. Hill certified that there are no known conditions that would preclude construction of the referenced Development on the proposed site, assuming compliance with the applicable land use regulations. There are numerous county approvals needed throughout the development approval process. The Zoning form does not require the local government official to certify that no additional approvals are needed following site plan review, or that the proposed project is ready to begin construction. Petitioners contend that neither of the Sheeler Club applications should have been deemed eligible because, despite Mr. Hill’s authorized certifications to the contrary, the projects do not have the ability to proceed. Petitioners do not contend that Mr. Hill was not authorized to execute the forms, or that the certifications were obtained through fraud or other illegality. As to the Site Plan form, Petitioners contend first that Mr. Hill did not review a site plan for either project proposed by Atlantic: Sheeler Club Apartments, 88 multi-family units; or Sheeler Club Apartments-Phase II, 64 garden apartments. Instead, Mr. Hill reviewed and certified the site plan for Sheeler Avenue Townhomes PD, which provides for development of single-family townhomes in a single phase over the entire site. Petitioners argue that the PD is conditioned upon development of townhomes in single ownership complying with section 38-79(20) of the Orange County Code of Ordinances, which is unrelated to construction of the “garden apartments” proposed by Atlantic in its application to Florida Housing for financing. Thus, Petitioners conclude, Mr. Hill has not reviewed a site plan for either Sheeler Club Apartments or Sheeler Club Apartments-Phase II. Mr. Hill testified that his certification did not depend on whether either or both of the proposed projects was eventually developed, but that the overall site has a PD zoning approval for a total of 152 units. Ken Reecy is the Director of Multi-family Programs for Florida Housing. He testified the purpose of the Site Plan form, and, for that matter, the Zoning form, is to verify “high- level” approval of the site. For example, if the applicant proposes a 64-unit project, Florida Housing wants verification that the developer will be able to deliver 64 units. As to the Zoning form, Petitioners present a parade of objections. Petitioners argue that the proposed use of the property for multi-family apartments and garden apartments is inconsistent with the zoning approval for single-family townhomes; thus, additional land use regulation approvals are required, contrary to the certified Zoning form. Petitioners point to the PSP approved for the subdivision of the property and argue that neither Sheeler Club project could be built in conformity with the PSP, which proposes to subdivide the property into 152 townhome lots. Relying on the PSP, Petitioners also argue that Sheeler Club Apartments-Phase II has no public road access without the Sheeler Club Apartments development, thus, Mr. Hill’s certification as to Phase II was incorrect and the project is not ready to proceed. Moreover, Petitioners argue that Atlantic “gerrymandered” the boundaries of the two projects in order to secure the most advantageous location for the “development location point”; therefore, the lot layout proposed in the PSP cannot be achieved on either of the two projects. Likewise, Petitioners argue the boundary is a change from the approved PSP, which requires additional land use approvals from the Board of County Commissioners. It is Florida Housing’s practice to accept the zoning and land use certifications by local officials, which it followed in this case. Florida Housing does not have the expertise, resources, or authority to evaluate local zoning and land use decisions. Petitioners would have the undersigned perform the analysis that Florida Housing did not and make a determination whether the Atlantic projects, as proposed, meet the requirements for zoning and land use approvals set forth in the certifications signed by Mr. Hill. Petitioners would have this tribunal interpret the Orange County Code of Ordinances and make findings regarding: whether the LUP PD would have to be amended for Atlantic to build the projects proposed in its funding application to Florida Housing; whether said amendments would constitute “substantial changes” to the approved PD, thus requiring additional public hearings; and, ultimately, whether the Site Plan and Zoning forms were executed in error. The undersigned declines to do so, as set forth more fully in the Conclusions of Law. In this particular case, Mr. Reecy testified that Orange County was aware of the issues raised by Madison Hollow and that he relied on Mr. Hill’s knowledge to make the right call on these forms. While there was certainly an abundance of testimony attempting to call into question the decisions of the Orange County authorities, the evidence does not support a finding that Florida Housing’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the solicitation specifications, or that it was clearly erroneous, contrary to competition, arbitrary, or capricious. In light of that finding, the audio recordings of Orange County Commission Meetings proffered by both Petitioners and Brixton Landing are not admitted. The recordings are irrelevant in this proceeding and have not been relied upon by the undersigned. Banyan Station and Lauderdale Place Madison Hollow alleges that two other applications, Banyan Station and Lauderdale Place, should have been found ineligible for failure to disclose the principals of the applicant and the developers, as required by RFA section Four.A.3. Both the applicants for, and developers of, Banyan Station and Lauderdale Place are limited liability companies (LLCs). Section Four.A.3.d.(2) requires applicants that are LLCs to provide a list identifying the principals of the applicant and the principals of each developer as of the application deadline. The RFA also directs applicants to Section 3 of Exhibit C “to assist the [a]pplicant in compiling the listing.” Exhibit C provides, “[t]he Corporation is providing the following charts and examples to assist the Applicant in providing the required list[.] The term Principal is defined in Section 67-48.002, F.A.C.” Florida Administrative Code Rule 67-48.002(93) reads, in relevant part, as follows: (93) ‘Principal’ means: With respect to an Applicant or Developer that is a limited liability company, any manager or member of the Applicant or Developer limited liability company, and, with respect to any manager or member of the Applicant or Developer limited liability company that is: 3. A limited liability company, any manager or member of the limited liability company. Exhibit C provides the following chart applicable to disclosures by LLC applicants: Identify All Managers And Identify all Members and For each Manager that is a Limited Partership: For each Manager that is a Limited Liability Company: For each Manager that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder and For each Member that is a Limited Partnership: For each Member that is a Limited Liability Company: For each Member that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder For any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required. Exhibit C further provides examples of fictitious applicants and developers followed by disclosure listings of managers, members, general and limited partners, officers, directors, and shareholders, as applicable. Banyan Station, applicant, HTG Banyan is a limited liability company. HTG Banyan listed its managers as Matthew and Randy Rieger, and its members as Camillus-Banyan, LLC, and Housing Trust Group, LLC. It then listed Camillus House, Inc., and RER Family Partnership, Ltd., as sole members of those LLCs, respectively. Applicant’s developer is also a limited liability company, HTG Banyan Developer, LLC. HTG Banyan Developer listed Matthew and Randy Rieger as the developer’s managers, and Camillus-Banyan, LLC, HTG Affordable, LLC, and Reiger Holdings, LLC, as its members. It listed Camillus House, Inc., RER Family Partnership, Ltd., and Balogh Family Investments Limited Partnership, as members of those LLCs. HTG Banyan Developer disclosed Matthew Reiger as the sole member of Rieger Holdings. Likewise, Lauderdale Place applicant, HTG Anderson, LLC, identified its managers and members, although some members were identified as LLCs. In each case, the applicant identified the principals of the applicant and the developer down “two levels” of organizational structure, even though in some cases this did not result in the disclosure of natural persons. Petitioners urge an interpretation of the disclosure requirement that would require an LLC to continue to identify members and managers until natural persons are identified. Respondents maintain that the rule and the RFA require disclosure of only “two levels” of organizational structure, as shown on the charts in Exhibit C. Petitioners did not make a showing that Florida Housing’s interpretation of the rule and the RFA is unreasonable. The definition of “principal” of an LLC includes members which are likewise LLCs. The assistive chart includes disclosures at only two levels of organizational structure. Furthermore, in Exhibit C, example 3, the disclosure for ABC, LLC, includes XYZ, LLC, as a member without further disclosure. In support of its argument, Petitioners rely upon the language below the chart which states, “[f]or any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required.” The plain language of the chart states that when disclosing managers and members of an LLC, for any manager or member who is a natural person, no further disclosure is required. The language does not state, as Petitioners would prefer, when disclosing managers and members of an LLC, disclosure must be made until all natural persons are disclosed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order affirming Brixton Landing for funding under RFA 2014-115. DONE AND ENTERED this 29th day of October, 2015, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of October, 2015.
The Issue The issues are whether the actions of Florida Housing concerning the review and scoring of the responses to Request for Applications 2020-208 (“RFA”), titled “SAIL and Housing Credit Financing for the Construction of Workforce Housing,” were contrary to the agency’s governing statutes, rules, policies, or the RFA specifications and, if so, whether the challenged award was contrary to competition, clearly erroneous, or arbitrary and/or capricious.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: THE PARTIES Quail Roost was an applicant for funding in the RFA. Quail Roost’s application was assigned number 2020-461SC and was preliminarily deemed eligible for consideration for funding, but was not selected for funding. Ali Baba was an applicant for funding in the RFA. Ali Baba’s application was assigned number 2020-476BS and proposed a development named City Terrace in Miami-Dade County. Ali Baba’s application was preliminarily deemed eligible and was selected for funding under the terms of the RFA. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code. § 420.5099, Fla. Stat. Florida Housing has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. For purposes of this proceeding, Florida Housing is an agency of the State of Florida. THE COMPETITIVE APPLICATION PROCESS The low-income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. Housing credits are awarded competitively to housing developers in Florida for qualifying rental housing projects. These credits are then typically sold by developers for cash to raise capital for their projects. The effect is to reduce the amount of money that the developer is required to borrow commercially. In return for the subsidized debt reduction, a housing credit property is required to offer lower, more affordable rents. Developers must also agree to keep rents at affordable levels for periods of thirty to fifty years. Florida Housing is authorized to allocate low-income housing tax credits, SAIL funding, and other named funding by section 420.507(48). Florida Housing has adopted Florida Administrative Code Chapter 67-60 to govern the competitive solicitation process. Rule 67-60.009(1) provides that parties wishing to protest any aspect of a Florida Housing competitive solicitation must do so pursuant to section 120.57(3), Florida Statutes. Funding is made available through a competitive application process commenced by the issuance of a request for applications. Rule 67-60.009(4) provides that a request for application is considered a “request for proposal” for purposes of section 120.57(3)(f). Applicants request a specific dollar amount of housing credits to be awarded to the applicant each year for a period of ten years. A successful applicant usually sells the rights to the future income stream of housing credits to an investor to generate the amount of capital needed to build the development. This sale is usually by way of an ownership interest in the applicant entity. The amount of funding that Florida Housing can award to an applicant depends on such factors as an RFA-designated percentage of the projected Total Development Cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. The RFA was issued on February 24, 2020, with responses due on March 30, 2020. The RFA was modified on March 13, 2020, and March 19, 2020, but the application deadline was unchanged. No challenges were made to the terms of the RFA. Florida Housing expects to award up to $17,954,000 in SAIL funding and up to $2,980,000 of housing credits through the RFA. Florida Housing received 22 applications in response to the RFA. A Review Committee was appointed to review the applications and make recommendations to Florida Housing’s Board of Directors (the “Board”). The Review Committee found 19 applications eligible and three applications ineligible for funding. Through the ranking and selection process outlined in the RFA, three applications were preliminarily recommended for funding, including that submitted by Ali Baba. The Review Committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On June 11, 2020, Florida Housing’s Board met and considered the recommendations of the Review Committee. Also, on June 11, 2020, at approximately 4:35 p.m., Quail Roost and all other applicants in the RFA received notice via the Florida Housing website of the Board’s eligibility determinations and of the preliminary selection of certain eligible applicants for funding, subject to satisfactory completion of the credit underwriting process. The notice consisted of two spreadsheets, one listing the Board approved scoring results in RFA 2020-208 and one identifying the applications which Florida Housing proposed to fund. Ali Baba’s was one of the applications proposed for funding. Under the scoring and ranking mechanism of the RFA explained below, Quail Roost’s application would be selected for funding were Ali Baba’s application to lose points or be found ineligible. Quail Roost timely filed the Petition. Ali Baba timely intervened. The Petition was referred to the DOAH. The RFA provided point scoring for mandatory “eligibility items.” The RFA then set forth an “Application Sorting Order” of funding goals and priorities that were used to break ties in the point scoring. Only applications that met all the eligibility items could participate in the ranking scheme that determined funding selection. The RFA included only one point scoring item. Applicants could receive five points for submission of a Principals Disclosure Form stamped by Florida Housing as “Approved” during the Advance Review Process. The Advance Review Process is available online and includes instructions and samples to assist the applicant in completing the Principals Disclosure Form. Section Four A.3.c.(2) of the RFA states: “Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline.” The stated goal of the RFA was to fund one application in Monroe County and one application in a “Large County,” i.e., Broward, Duval, Hillsborough, Miami-Dade, Orange, Palm Beach, or Pinellas County. The Application Sorting Order was set forth as follows at Section Five B.2. of the RFA: The highest scoring Applications will be determined by first sorting together all eligible Applications from highest score to lowest score, with any scores that are tied separated in the following order: First, by the Application’s eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application’s Leveraging Level which is outlined in Item 3 of Exhibit C of the RFA (with Applications that have a lower Leveraging Level listed above Applications with a higher Leveraging Level); Next, by the Application’s eligibility for the Florida Job Creation Funding Preference (which is outlined in Item 4 of Exhibit C) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; and By lottery number, resulting in the lowest lottery number receiving preference. The RFA’s “Funding Test” provision at Section Five B.3. stated that applications “will only be selected for funding if there is enough Workforce SAIL funding available to fully fund the Applicant’s Workforce SAIL Request Amount, and, Monroe County Applications will only be selected for funding if there is enough Workforce SAIL funding available to fully fund the Applicant’s Workforce SAIL Request Amount, and enough Competitive 9% Housing Credit funding available to fully fund the Applicant’s Competitive 9% Housing Credit Request Amount.” The total available amount was $17,954,000 in SAIL funding, with at least $2,520,000 of that amount reserved for Monroe County. Section Five B.4. of the RFA described a “County Award Tally” that provided as follows: As each Application is selected for tentative funding, the county where the proposed Development is located will have one Application credited towards the County Award Tally. The Corporation will prioritize eligible unfunded Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Applications with a higher County Award Tally that also meet the Funding Test, even if the Applications with a higher County Award Tally are higher ranked. The RFA’s “Funding Selection Order” was set forth as follows at Section Five B.5.: The first Application selected for funding will be the highest ranking eligible Application that is eligible for Monroe County Goal. The next Application selected for funding will be the highest ranking eligible Application that is eligible for the Large County Goal. Once the goals are met or if there are no eligible Applications that can meet the goals, then the Corporation will select the highest ranking eligible unfunded Application(s) subject to the Funding Test and County Award Tally. If funding remains after funding all eligible Application(s) that can meet the Funding Test or because there is no eligible unfunded Application that can be fully funded, then no further Applications will be selected for funding and any remaining Total Remaining SAIL funding, as well as any unallocated 9% HC funding, will be distributed as approved by the Board. PRINCIPALS DISCLOSURE FORM The RFA required applicants to upload the Principals Disclosure Form, the full title of which is “Principals of the Applicant and Developer(s) Disclosure Form” (Form Rev. 05-2019). As an eligibility item, Section Four A.3.c.(1) of the RFA required that the Principals Disclosure Form: must identify, pursuant to Subsections 67- 48.002(94), 67-48.0075(8) and 67-48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. As stated above, applicants received 5 points if the uploaded Principals Disclosure Form was stamped “Approved” during the Advance Review Process. Ali Baba’s Principals Disclosure Form went through the Advance Review Process and was stamped “Approved for Housing Credits” by Florida Housing staff on March 16, 2020. Ali Baba’s application was awarded the requisite 5 points. Rule 67-48.002(94)(a) defines “Principal” for entities including corporations, limited partnerships, limited liability companies, trusts, and public housing authorities. For a corporation, “Principal” means “each officer, director, executive director, and shareholder of the corporation.” Quail Roost alleges that Ali Baba is ineligible for funding and should lose 5 points for failure to disclose all of the principals of the applicant and its developer, Opa-Locka Community Development Corporation, Inc. (“Opa- Locka Corp.”). Specifically, Quail Roost alleges that the name of Chad Jackson, a member of the Board of Directors of Opa-Locka Corp., was not disclosed on Ali Baba’s Principals Disclosure Form. Ali Baba concedes that members of the Board of Directors of the Opa- Locka Corp. are by definition principals who must be included on the Principals Disclosure Form. Ali Baba also conceded that Mr. Jackson was a member of the Board of Directors and was not included on Ali Baba’s Principals Disclosure Form. Dr. Willie Logan, the President and CEO of Opa-Locka Corp., testified that Mr. Jackson is a local low-income housing resident who is an appointed member of the Board of Directors of Opa-Locka Corp. Dr. Logan testified that a resident such as Mr. Jackson must be on the Board of Directors in order for Opa-Locka Corp. to receive funding from the U.S. Department of Housing and Urban Development. Though Mr. Jackson’s name is not included on the Principals Disclosure Form, Ali Baba did disclose Mr. Jackson’s name in a list of its 2019-2020 Board of Directors included as part of Attachment 3 of its application. Non-Profit entities are required to submit “the names and addresses of the members of the governing board of the Non-Profit entity” in Attachment 3. Ali Baba argues that this submission should be sufficient to render Ali Baba’s failure to include Mr. Jackson’s name on the Principals Disclosure Form a minor irregularity. Marisa Button, Director of Multifamily Programs for Florida Housing, testified as to the reasons Florida Housing requires disclosure of all principals on the Principals Disclosure Form. The RFA includes a financial arrearage requirement stating that an application will be deemed ineligible for funding if the applicant or any affiliated entity is in financial arrears to Florida Housing. Ms. Button testified that Florida Housing uses the information on the Principals Disclosure Form to ensure that the financial arrearage requirement is met and no principals are in financial arrearages to Florida Housing. Ms. Button testified that Florida Housing also uses the Principals Disclosure Form as a cross-reference to determine whether any of the disclosed entities or individuals have been de-obligated or barred from participation in Florida Housing’s programs. Ms. Button testified that Florida Housing considers it a material deviation from the RFA requirements when an applicant fails to disclose a principal on the Principals Disclosure Form. She testified that the disclosure of Mr. Jackson’s name elsewhere in Ali Baba’s application does not change the analysis because Florida Housing cannot take it upon itself to presume that an individual not named in the Principals Disclosure Form is a principal of the applicant. Ms. Button explained that before adopting the RFA process in which a number of solicitations are issued for various funding sources over the course of a year, Florida Housing used a single annual application called the “Universal Cycle.” She stated that Attachment 3 is a holdover from the Universal Cycle process, which did not require the filing of a Principals Disclosure Form. Florida Housing used Attachment 3 to verify an applicant’s status as a nonprofit entity for those projects that included funding goals for nonprofits. Ms. Button testified that Florida Housing currently reviews Attachment 3 to ensure that entities designating themselves as nonprofits have included their supporting information. It is in no way interchangeable with the Principals Disclosure Form. Ms. Button also noted that the list of Ali Baba’s Board of Directors included in Attachment 3 was dated March 26, 2020. The application deadline was March 30, 2020. Ms. Button testified that, even if Florida Housing were inclined to allow Attachment 3 to supplement the Principals Disclosure Form, the time difference between the two documents would render Attachment 3 unreliable as an indicator of Ali Baba’s principals as of the application deadline. Quail Roost pointed to another discrepancy in Ali Baba’s Principals Disclosure Form. As stated above, the name of the applicant entity is “675 Ali Baba, LLC.” The project manager of 675 Ali Baba, LLC, is “675 Ali Baba Manager, LLC.” However, Ali Baba’s Principals Disclosure Form identified the manager as “Ali Baba Manager, LLC.” Ali Baba concedes that its manager was not accurately disclosed on the Principals Disclosure Form. Dr. Logan testified that this was a mere typographical error and that to his knowledge no entity called “Ali Baba Manager, LLC,” existed. Ali Baba pointed to multiple other places in its application that correctly identified the manager as “675 Ali Baba Manager, LLC.” Ms. Button testified that Florida Housing considers the misnaming of the management entity to be a material error for the same reason it finds the omission of an individual principal to be a material error: Florida Housing cannot perform due diligence checks on the entity if it is not correctly identified. Ms. Button acknowledged that Florida Housing has treated typographical or grammatical errors as minor irregularities in the past; however, this was not a minor irregularity because the failure to correctly name the manager affected Florida Housing’s ability to investigate the entity for financial arrears or debarment. As in the case of Mr. Jackson, the fact that 675 Ali Baba Manager, LLC, was correctly identified elsewhere in Ali Baba’s application did not affect the analysis. Ms. Button testified that Florida Housing does not, and cannot, under its rules and the principles of competitive bidding, look beyond the Principals Disclosure Form to determine the identities of the applicant’s principals. SCATTERED SITES As an eligibility requirement in the RFA, applicants were required to provide information regarding the location of their proposed developments. Section Four A.5.d.(1) of the RFA required that a Development Location Point (“DLP”) be stated for the latitude/longitude coordinates in decimal degrees, rounded to at least the sixth decimal place. The DLP identified by Ali Baba is not in dispute in this proceeding. Section Four A.5.d.(2) of the RFA stated that if the proposed development consists of Scattered Sites, i.e, non-contiguous parcels,2 then in addition to the DLP information, the applicant must “provide the latitude and longitude coordinates of one point located anywhere on the Scattered Site” for each Scattered Site. As with the DLP, the coordinates for the Scattered Sites were required to be stated in decimal degrees and rounded to at least the sixth decimal place. In its application, Ali Baba proposed a development that included three Scattered Sites. Ali Baba provided the following latitude and longitude coordinates for those sites: A) 25.901060, -80.251883; B) 25.901267, -80.251473; and C) 25.901884, -80.253365. Ms. Button testified that Florida Housing takes the coordinates in the application at face value and does not verify whether the coordinates provided for the Scattered Sites are actually on the proposed sites. During discovery in this proceeding, Quail Roost established that, due to a mapping error, Ali Baba’s identified coordinates for the three Scattered Sites were not located on the Scattered Sites, but approximately 35, 73, and 75 feet off the Scattered Sites, respectively. As an eligibility item, the RFA included a mandatory distance requirement. In Miami-Dade County, the distance between the DLP and the coordinates provided for any Scattered Sites must be at least 0.5 miles from the closest development that is identified as serving the same demographic as that proposed by the applicant. Ms. Button testified that the mandatory distance requirement ensures that Florida Housing does not fund developments in close proximity to other 2 A detailed definition of “Scattered Sites” is set forth in rule 67-48.002(106). recently funded developments serving the same demographic, thus avoiding issues with leasing and occupancy rates for new developments. To confirm distances from other developments, the RFA instructs applicants to use Florida Housing’s Development Proximity List, dated August 16, 2019 (“Proximity List”). The Proximity List contains information on recently funded developments, including latitude and longitude coordinates, addresses, and whether the demographic of the development is classified as Family, Elderly, Non-ALF, ALF, or Workforce Housing. Florida Housing uses the DLP and Scattered Sites coordinates provided by successful applicants to develop the Proximity List for the next funding cycle of applications. The developments receiving funding in this RFA will be added to the Proximity List for prospective applicants in the 2020-2021 funding cycle to evaluate for the mandatory distance requirement. Florida Housing has created a draft Proximity List for the next funding cycle that includes the coordinates provided in the Ali Baba application. The draft Proximity List puts future applicants on notice of applications that are in litigation, including the Ali Baba application. In its application, Ali Baba selected the Workforce Housing demographic. According to the Proximity List, the closest Workforce Housing development is approximately 5 miles from Ali Baba’s proposed development. Ali Baba argues that its inaccurate Scattered Sites coordinates should be considered a minor irregularity because the distances from the sites are less than 100 feet and did not change the finding that the Ali Baba development would not be located within 0.5 miles of the closest Workforce Housing development funded by Florida Housing. Ali Baba argues that because the draft Proximity List provides notice that its application is subject to litigation, no reasonable prospective applicant would rely on Ali Baba’s coordinates. Ali Baba notes that Florida Housing retains the authority to revise the coordinates on the draft Proximity List. Ali Baba contends that the purpose of the mandatory distance requirement is to measure proximity to the nearest development and that it is undisputed that Ali Baba’s proposed development is more than 0.5 miles away from the nearest Workforce Housing development funded by Florida Housing. Ali Baba urges that the minimal error as to the Scattered Sites coordinates in its application should be deemed a minor irregularity that conferred no competitive advantage on Ali Baba. Ms. Button testified that the error in Ali Baba’s coordinates for its Scattered Sites is a material deviation that renders the Ali Baba application ineligible for funding. The fact that the next closest Workforce Housing development was over 5 miles away does not make Ali Baba’s error a waivable minor irregularity because the coordinates provided did not meet the requirements of the RFA. Ms. Button testified that Scattered Sites coordinates are an eligibility item and Ali Baba’s error thus renders its application ineligible for funding. Absent litigation, Florida Housing would have no way of knowing that an applicant’s Scattered Sites coordinates were not accurate. Florida Housing takes the coordinates at face value and does not take measurements or have surveyors confirm the information. Instead, it relies on the application and the fact that the applicant certifies that the information in the application is true and correct. Ms. Button testified that inaccurate coordinates can affect a prospective applicant’s decision on whether to apply for funding because applicants rely on the coordinates in the Proximity List to determine whether or not they can meet the mandatory distance requirement. Florida Housing reasonably concludes that an applicant bears ultimate responsibility for the accuracy of the information submitted in its application. The fact that litigation has in this case provided a correction to Ali Baba’s erroneous Scattered Sites coordinates does not transform Ali Baba’s failure to comply with an eligibility item into a minor irregularity.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order as to 2020-208 finding that Ali Baba is ineligible for funding and awarding funding to Quail Roost, subject to the successful completion of credit underwriting. DONE AND ENTERED this 23rd day of September, 2020, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September, 2020. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) Michael P. Donaldson, Esquire Carlton Fields, P.A. Suite 500 215 South Monroe Street Tallahassee, Florida 32302 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Brittany Adams Long, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
